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Twitter Not Winning Over Enough Tweeters

posted 6 Feb 2014, 09:28 by Mpelembe   [ updated 6 Feb 2014, 09:29 ]


BVO - Investors looking for skyrocketing subscriber growth at Twitter - will have to twiddle their thumbs.

In its first quarterly scorecard since going public late last year - the microblog announced a rise in average monthly users of 241 million in the fourth quarter; that was slower than expected.

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As a matter of fact, the growth rate of Twitter's user base was less than four percent, which was the lowest for the whole year.

The results suggest getting people to sign on - not as easy in the crowded and growing field of social media, says S&P Capital IQ's Scott Kessler.


"Twitter is not the first, the second, or the third but the fourth largest global social network based in the U.S. behind Facebook, behind Google+ and behind LinkedIn and there was a reason for that because it is just not as accessible or easy to use as maybe some of those other platforms are. And then I think what's really important is the second item, which is - it costs a lot of money to invest and expand and sustain growth."

And sustaining growth, by getting more eyeballs to view advertising pitches and keeping users on the site longer - the latter which it failed to do - is key to justifying a lofty stock price. Shares were up more than 150 percent since its market debut, but tumbled double-digits immediately after the subscriber numbers were made public.

For Kessler, who already had a "sell" rating on the stock - Twitter's results confirm his belief investors are expecting too much from the young company.


"User growth and engagement growth, I think is called into question at this point. Twitter has pretty much been a momentum story, a momentum stock but it seems like in certain respects the momentum has maybe fallen somewhat when it comes to the fundamentals."

But not all the news was bad. Investors overlooked a surprise quarterly profit of two cents a share, excluding items, compared to an anticipated loss.

And a rise in revenues to $243 million, along with sales guidance for the current quarter that was above the consensus.

The only problem - if tweeters are spending less time looking at other tweets - that kind of sales grow may fly away.