This may be what’s behind Twitter CEO Jack Dorsey’s description of his company’s 2016 performance as “transformative” – whatever that means.
Falling short of industry analysts’ forecasts yet again, Twitter experienced a revenue increase of only about 1% year-over-year during 2016.
Monthly active users didn’t look much better either, with the total number barely budging.
While I have no actual proof, one explanation of tepid active user growth may be that Twitter became the de facto “place for politics” in the 2016 U.S. Presidential election — which didn’t actually end in November and continues apace even today.
Simply put, for many people, politics isn’t their cup of tea — certainly not on a 24/7/365 diet, ad nauseum.
Quite telling, too, was the fact that advertising revenue showed an absolute decline during the 4th Quarter, dropping below $640 million for the period.
Even more disturbing for investors, the company’s explanation about the steps Twitter is taking to address its performance shortfalls smacks of vacuousness, to wit this statement from CEO Dorsey:
“While revenue growth continues to lag audience growth, we are applying the same focused approach that drove audience growth to our revenue product portfolio, focusing on our strengths and the real-time nature of our service.”
“This will take time, but we’re moving fast to show results,” Dorsey continued, rather unconvincingly.
One bright spot in the otherwise disappointing company results is that revenues from international operations – about 39% of total overall revenues – climbed ~12% during the year, as compared to a ~5% revenue drop domestically.
Overall however, industry watchers are predicting more in the way of bad rather than good news in 2017. Principal analyst Debra Aho Williamson at digital media market research firm eMarketer put it this way:
“Twitter is losing traction fast. It is starting to shed once-promising products such as Vine, and [to] sell off parts of its business such as its Fabric app development platform. At the same time, some surveys indicate that Twitter is becoming less integral to advertisers’ spending plans. That doesn’t bode well for future ad revenue growth.”
With a prognosis like that, can the next big drop in Twitter’s share price be far behind?
What do you think?