Twitter Flies Into Trouble As Losses Mount

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Written By Mostafa Moradi

Twitter share prices dived 12% on the news losses at the social networking company are stacking up as revenues and user numbers stand still.

The social networking company posted a loss of $167 million for the last quarter of 2016 – up $77 million in a year when a $90 million loss was posted.

Income rose slightly from $710 million 12 months ago to $717 million at the end of December 2016. Active user numbers increased 4% to 319 million.

Analysts had hoped Twitter’s fortunes would rise on the back of Donald Trump becoming president as one of the world’s leading Tweeters.

Since taking office, he has taken to sending out messages to his 24.4 million followers via the service. Despite the Trump effect, Twitter has continued to fail to impress.

Where is the Twittersphere?

The problem is Twitter does not really have a defined space in the social networking sphere.

Facebook and LinkedIn offer networking for individuals and business without a 140-

character cap on messages and have regularly improved and extended their services. Twitter argues daily user numbers are growing, but investors cannot see a sustainable business model that will propel the service forward.

Chief executive Jack Dorsey said last year was “transformative” for the network.

“We reset and focused on why people use Twitter: it’s the fastest way to see what’s happening and what everyone’s talking about,” he said.

“We overcame the toughest challenge for any consumer service at scale by reversing declining audience trends and re-accelerating usage.”

Dorsey also tried to explain that daily active usage had increased for the third consecutive quarter and the upward trend was set to continue.

Data dilemma

“While revenue growth lags 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,” he said.

“This will take time, but we’re moving fast to show results.”

Analysts are wary of Twitter’s daily usage stats as the company releases percentage changes but not the underlying figures.

“It’s easier to generate higher growth rates off smaller bases, and the potentially small size of Twitter’s daily active user base is what’s troubling,” wrote Evan Niu, for investment web site Motley Fool.

“Investors simply don’t have a clear picture of how big or small the base is, or the ratio of daily active users to monthly active users. Analysts even explicitly asked for a precise figure, and the company declined to provide one.”