Twitter shares plunged 14% after posting disappointing growth in active users
Shares in Twitter plunged by as much as 14 percent in after-hours trading after the micro-blogging platform posted disappointing growth in monthly active users.
The tech giant reported revenues for fiscal 2015 of $2.2bn (£1.5bn), up 58 percent compared to the previous period.
The company said that the results represent “another very strong year for Twitter”.
However, investors appear to be more concerned about the microblogging platform’s sluggish rate of growth.
Twitter reported a drop in monthly active usage in the last quarter and on a year-on-year basis monthly active users only rose 9 percent to 320 million.
Twitter has about one fifth of the number of monthly active users (MAUs) compared to Facebook (which boasted 1.6 billion MAUs at the end of 2015).
After its growth figures went public shares in Twitter dropped as much as 14 percent, though it should be noted that shares in the company have since recovered the losses.
In its latest results Twitter said: “We saw a decline in monthly active usage in Q4, but we’ve already seen January monthly actives bounce back to Q3 levels. We’re confident that, with disciplined execution, this growth trend will continue over time.”
The company is not profitable yet, but it’s making progress. It posted a loss of $90m (£62m) in the fourth quarter, down 28% year-on-year, while losses for the full year fell 10% to $521m (£359m).
Revenue expectations failed to meet Wall Street forecasts, with Twitter anticipating revenue for the current first quarter of $595m-$610m (£410m-£420m).
The Q4 results were made public only hours after the company announced a major revamp in the way tweets will be displayed on a user’s timeline – the best algorithimically-selected tweets will be shown at the top of a user’s timeline now. The idea behind the change is that users will see tweets that they are “most likely to care about” at the top of the list. Twitter has said that users can choose to deactivate the new feature if they don’t like it.
Twitter said that this year they will implement many more “significant changes” for the product.
It’s still too early to tell whether these changes will be able to help boost user growth.
However, the company’s finding other ways of boosting profitability; namely by expanding advertising.
Twitter is said to be working on making it possible for visitors who aren’t logged in to the service to see advertisements if they click on a tweet from an external source, such as from a Google a search.
Twitter claims that making this change would significantly increase the exposure of ads on its site. Sites such as YouTube are able to monetize traffic without visitors having to ‘log in’ or create an account, so it’s a promising direction for Twitter to adopt as well.
According to EMarketer, Twitter is forecast to account for 9 percent of worldwide social-media advertising spending in 2016.