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TWTR Stock Price: Are Twitter’s Active Users Going Flat?

Posted On August 16, 2017 4:11 pm
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A Twitter banner on Wall Street

Bearish sentiment keeps haunting Twitter Inc (NYSE:TWTR). The TWTR stock price for the second quarter is in, which missed analyst estimates for the revenues. The struggling social media company earned $0.08 per share on $573.9 million revenue, versus the consensus of $0.05 EPS and $536.62 million revenue. Monthly active users in the quarter were just 328 million, almost flat year over year. The Street was expecting Twitter to report at least 332.5 million monthly active users. Daily active users grew by 12% year-over-year.

Twitter Inc (NYSE:TWTR)’s advertising revenue is also falling, as advertisers are flocking to more vibrant social platforms like Facebook and Instagram. The only segment that is growing in terms of revenue is data licensing, but its growth isn’t strong enough to offset the declines recorded from other segments.

Twitter’s worldwide expansion isn’t helping its ads revenue, because ads prices are most lucrative for the US-based users. Here is a chart showing Twitter’s ad revenue in and outside of the US.

Related: Google’s Ads Revenue Shows Whopping Gains

 

A chart showing Twitter's ad revenue inside and outside the US.

Investors have high hopes of Twitter Inc (NYSE:TWTR)’s videos. The company said that it had over 55 million unique video views in the second quarter. In May, Twitter Inc (NYSE:TWTR) hired Todd Swidler as the new head of live video segment.

Last year, Twitter signed a $10 million deal with the NFL last to broadcast Thursday Night Football games. In the second quarter, over 1,200 hours of live content was streamed on Twitter, more than double the number of hours reported two quarters earlier.  

After losing the NFL deal to Amazon, Twitter started striking deals with small entities like WNBA, Major League Lacrosse, and the Canadian Football League. But video alone cannot save Twitter Inc (NYSE:TWTR). Twitter will have to find new revenue streams and ways to monetize its customer base.

Related: Here’s Why You Shouldn’t Buy Netflix Stock

The company recently appointed former Goldman Sachs banker Anthony Noto as the new COO. Noto is currently leading a major transformation at the company. He reportedly wants to increase the engagement by promoting celebrity engagement, political debates, videos and sports programming.

The TWTR stock price is down about 2% since the start of this year. If you aren’t ready to wait for a miracle or at least two years, you should not buy Twitter Inc (NYSE:TWTR). Last month, Morgan Stanley internet analyst Brian Nowak said in a report that Twitter is expected to lose advertiser interest through 2017 and 2018. The analyst has a $10 price target on the stock. Nowak also expects Twitter’s ads revenue to decline by 17% in 2017 and by 10% in 2018.

Related: Should You Be Investing In Snapchat?

 

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