Twitter shares fall amid concern over falling user numbers

Andrew Cummings
February 8, 2019

Twitter is also anticipating operating income during the quarter of $5 million to $35 million-well below the $74.9 million operating income Twitter posted during the same period previous year. If a Snapchat user taps a message notification, reads that message in the app, and then closes out, they are now a daily active user, but they at no point had the chance to see an advertisement, which is what advertisers really want to know from the data.

The reasoning is that a less-toxic Twitter should benefit its standing with ad buyers in the long term.

Clement Thibault, analyst at global financial platform, said: "Total user numbers are down, but we've known for a while now that Twitter has a fake-users problem and is trying to deal with it, so that shouldn't come as a surprise to anyone". Shares in Twitter were down before trading started for the day.

"At first glance, we are encouraged by ongoing positive revenue and mDAU ("monetizable" DAU) trajectory with strong Q4 results; however, management's guidance suggests higher levels of platform investment amid a slowdown in revenue growth", Sebastian wrote in a note Thursday to investors.

Analysts polled by FactSet were expecting earnings of 25 cents per share and revenue of $867 million.

Instagram alone had 500 million daily active users in 2017 (the most recent data we could find) and is most likely getting even more than that today.

Operating expenses are expected to surge about 20 percent year-on-year in 2019, the company said, due to efforts to improve the health of its platform, exceeding analysts' average estimate of 12 percent.

The social media company said monthly active users declined, partly because it deleted millions of abusive accounts following criticism the platform was being used for political manipulation and hate speech. Total advertising revenue was up 23% quarter-on-quarter to $791m, with video ads representing more than half of sales.

Despite the growth in 2018, investors are concerned with Twitter's forecast for the first quarter; the company predicted ad revenue fall to between $715 million and $775 million.

For the sake of comparison, the number of daily active users on Twitter at the same time a year ago was 115 million, which would mean daily use went up by almost nine percent.

Revenue grew 24 percent to $909 million. After the earnings report for the first quarter of 2019, Twitter will discontinue posting its figures for monthly users, he said.

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