Twitter added no new users in the fourth quarter, confirming the fears of advertisers and investors alike: The social-media site is in real trouble.
The company has faced sharp criticism over slowing growth in its audience since a 2013 initial public offering. Even as Chief Executive Officer Jack Dorsey rolled out efforts to make its product more mainstream, by some measures Twitter’s user base shrank from the third quarter.
Twitter tried to divert Wall Street analysts’ attention by listing reasons to believe in its future, including a stronger focus on live events and video, several coming tweaks to the product that it says will benefit advertisers, and a vow to aggressively hire good board members and engineers. Still, a disappointing first-quarter revenue forecast indicates the lack of user growth is also hurting its ability to draw in more ad dollars, threatening its core business.
“This is the critical period for Twitter, and they need to show more than just optimism,” said Rob Sanderson, an analyst at MKM Partners. “It’s very vulnerable right now, and especially if we are heading into a recessionary environment, those ad dollars are going to become more difficult to get — for everybody.”
Twitter shares fell 4.5 percent to $14.31 in New York. Earlier, the stock tumbled to its lowest price ever, dropping as much as 7.1 percent to $13.91.
Monthly active users were 320 million in the last three months of the year — the same number the company reported in the third quarter — while analysts on average had estimated 324 million. Revenue in the first quarter will be $595 million to $610 million, the San Francisco-based social network said Wednesday in a statement.
That compared with an average analyst projection of $627.6 million, according to data compiled by Bloomberg.
Five priorities
Twitter shares have dropped 38 percent this year amid deepening skepticism about the company’s turnaround efforts under Dorsey, a co-founder who returned as CEO. Dorsey, who started his tenure in October with staff cuts and the appointment of a new chairman, has been rallying his teams to make the site more accessible and useful for following news stories and live events.
On Wednesday he outlined his five priorities: making the main product easier to use, investing in live streaming video, giving creators and influencers better tools, investing in making Twitter safer, and supporting developers.
Twitter has considered lifting a 140-character limit in posts, which has been the format since the company started. The company said Wednesday it will also change the “.@” structure for replies on the site.
Earlier in the day, Twitter said it would start displaying more popular tweets at the top of a user’s feed, instead of keeping them in the company’s traditional reverse-chronological stream.
Twitter is also working to deal with its user-growth challenge another way: by making it possible for non-members to see advertisements if they click on a tweet, say, in a Google search or a news article. Opening up advertising to that audience adds 500 million people, Twitter has said, and makes its business model more like YouTube’s — you don’t have to log in to be valuable to the company.
The early efforts in this direction look promising, the company said on its call with investors.
