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Twitter’s Revenue, Audience, and Stock Sagging

15 Feb, 2017 By: Doug McPherson

SAN FRANCISCO – Twitter missed analysts’ projections of fourth-quarter earnings and saw a paltry 1-percent revenue bump to $717 million year-over-year. Ad revenue totaled $638 million, during the period – down slightly year-over-year.

Adjusted earnings of 16 cents per share did best forecasts for the period, but user growth still sagged with monthly active users up just 4 percent to 319 million year-over-year. Also sagging: Twitter’s stock. In two trading sessions after the announcement, it lost 16.7 percent.

Pivotal Research Group analyst Brian Wieser said in an investor note that his company is altering its long-term forecasts for Twitter and reducing its price target from $17 to $15 on a year-end 2017 basis.

Twitter CEO Jack Dorsey said that while revenue growth continues to lag audience growth, “We are applying the same focused approach that drove audience growth to our revenue product portfolio, focusing on our strengths and the real-time nature of our service. This will take time, but we’re moving fast to show results.”

Twitter is expecting adjusted earnings somewhere between $75 million and $95 million for first-quarter 2017.

Anthony Noto, Twitter’s COO admitted that revenue growth “will continue to lag audience growth due to the sales cycle.” He added, “It could be further impacted by the escalating competition for digital advertising spending and our efforts to re-evaluate our revenue product feature portfolio. We will continue to increase the value we provide advertisers by simplifying and differentiating the portfolio and improving the engagement and measurement of our products.”

Not everyone is a fan. Debra Aho Williamson, principal analyst at eMarketer, said in a recent note that Twitter is “losing traction fast” and “some surveys indicate that Twitter is becoming less integral to advertisers’ spending plans. That doesn’t bode well for future ad revenue growth.”

Analysts say some of Twitter’s problem is competition from Snapchat, Instagram, and others vying for the same ad dollars. 

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