Twitter Inc. (NYSE:TWTR) might not have announced user growth numbers that Wall Street wanted. But it did give the clearest of indication that it was doing all it can, to offset a further slump, helping take the hit off the embattled CEO, Dick Costolo. During an interview on CNBC, Jackdaw Research analyst, Jan Dawson, pointed out that Twitter needs to reinvent itself as one of the ways of offsetting the ongoing decline in user growth, as well as engagement numbers.
A point of concern has to do with Twitter Inc. (NYSE:TWTR) adding few users in the fourth quarter far less than what analysts were expecting, in a business that is highly dependent on active user’s numbers.
“The key to a business like Twitter is there are basically three growth players or drivers if you like. The first of those is user growth, which we’ve already talked about is not happening right now in a big way. The second is engagement, by those users, and the third is monetizing that engagement,” said Mr. Dawson
Twitter Inc. (NYSE:TWTR) seems to be doing well on the monetization front according to the analyst something that investors have been calling for all along. The amount of revenue that the giant social network generated from its user base was solid, much to the excitement of Wall Street, seen by the stock rallying in the market.
Twitter posted revenues of $479 million against analysts’ estimates of $453 million. Its net loss narrowed to $125.4 million or 20 cents a share from last year’s highs of $511.5 million or $1.41 a share. Questions continue to be asked on whether Twitter Inc. (NYSE:TWTR)’s current model may be crumbling, seen by the company trying out new features like instant Timeline, as well as video capturing and share.
“The key thing with Twitter Inc. (NYSE:TWTR) is that its traditional model of highly engaged users who have an account to actively follow a large number of accounts and actively participate by sending their own Tweets and so on. That model is just capping out in terms of growth and what Twitter has got to do now is reinvent itself for the rest of the world,” said Mr. Dawson.
Dawson also believes that Twitter Inc. (NYSE:TWTR) could be a potential acquisition target for other companies should the current woes on user growth numbers, and engagement numbers persist.
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