Twitter Inc. (TWTR) Q1 2016 Earnings Preview: User Growth Stagnant As ‘Beautiful Products’ Slow To Roll Out
The following is an excerpt from Kerry Flynn | April 25, 2016 | ibtimes.com |
Social media company Twitter Inc. (TWTR) is expected to report a less-severe first-quarter loss compared to last year as it squeezes more revenue from a relatively stagnant user base.
The San Francisco-based company, which reports first-quarter 2016 earnings Tuesday after the markets close, has a lot to address after its last report in February sent shares immediately plunging by 11 percent. While Twitter beat revenue expectations, just slightly, its active user numbers dropped. Following years of stagnating user growth that already disappointed investors, Twitter actually stopped at 320 million — a user count that paled in comparison to Facebook’s 1.59 billion.
That number included SMS fast followers, or users who exclusively use Twitter through text messages. Twitter will no longer report that statistic for the monthly active user number, and so the comparable monthly active user number is pegged at only 305 million.
CEO Jack Dorsey said the user numbers had already gone up since the end of 2015, but investors do not predict much movement there. Deutsche Bank estimated an additional 2 million would be added in the quarter. But the company will have much more to prove than meeting those expectations. “They need to address introductory usability of the product. Once you land in Twitter, you’re like, ‘Is this all there is?’” said Kim Forrest, vice president and senior equity analyst at Fort Pitt Capital Group. “As investors you have to evaluate: is this the team that can do it, while not junking up what people like about it?”
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