Twitter struggles to gain new users while revenue jumps

09 February, 2018, 04:58 | Author: Patty Aguilar
  • Twitter has reported its first quarterly profit four years after the social media giant first became a publicly traded company making $91million in the fourth quarter of 2017

On a less impressive note, Twitter reported average monthly active users (MAUs) of 330 million during the fourth quarter, which was flat compared to the third quarter and up 4% year-over-year.

Twitter's quarterly profit and rising revenue reignited speculation on Thursday among some analysts that a larger company could try to buy it. Wells Fargo & Co lifted their target price on shares of Twitter from $16.00 to $19.00 and gave the stock a "market perform" rating in a research note on Friday, October 27th. The company in January also lost its chief operating officer, Anthony Noto - a crucial lieutenant to Dorsey as the Twitter founder continues to act as chief executive for both Twitter and Square.

Average daily active users grew 12 per cent year-over-year, marking the fifth consecutive quarter of double-digit growth. Profitability will certainly be welcomed over the next three months, but the team could use with a couple of ideas on how to increase the total number of users if it wants to make a real dent on the connected economy.

In October Twitter had signaled it could turn a quarterly profit as it slashed expenses. The business's revenue for the quarter was up 2.0% compared to the same quarter last year. equities analysts forecast that Twitter Inc will post 0.02 EPS for the current year.

Revenue from outside the United States rose 17 percent, making up for an 8 percent decline in USA sales. Revenue from Japan was a particular strength, rising 34% to US$106 million.

The tally of users is closely watched by investors as a sign of future ad sales potential.

The company also continued a push to grow its non-advertising revenue.

The social media site reported net income of $91m (€73.66m), compared with a loss of more than $167m (€134.86m) in the same period previous year.

Overall revenue was $731.6 million, beating Wall Street's target of $686.1 million, according to Thomson Reuters I/B/E/S.

Twitter says it expects to be profitable for all of 2018 as well.

Analysts had expected 333 million monthly users but investors still reacted positively to Twitter's surprise profit with shares jumping 15 per cent in pre-market trading.

Analysts on average had expected 332.5 million monthly active users, according to financial data and analytics firm FactSet.

Twitter (NYSE:TWTR) was downgraded by stock analysts at Pivotal Research from a "hold" rating to a "sell" rating in a research report issued to clients and investors on Thursday.

"It's too early to say whether they've turned a corner but they have certainly gotten off to a good start with the fourth quarter results", she added, noting that the results still highlight sluggish user growth, a decline in United States users possibly linked to a push to remove automated accounts or "bots".

Dorsey doubled the number of characters allowed in each tweet in most languages, from 140 to 280, and tried to limit the harassment of women and minorities on the site. Live news and entertainment content have been added to the feed, through third-party deals. SG Americas Securities LLC now owns 2,419,052 shares of the social networking company's stock valued at $58,081,000 after acquiring an additional 2,406,186 shares in the last quarter.

Shares in Twitter had already surged 47% over the past 12 months as of Wednesday's close, outpacing a 17% rise in the S&P 500 Index.

The social media sector is trying to cope with a regulatory backlash in Europe and the United States over privacy, addiction to the medium, hate speech and alleged abuse of social media by Russian Federation to sway foreign elections.



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