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Twitter Inc.

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Twitter’s second-quarter results were hurt by slowing user base as monthly average users (MAUs) declined sequentially. This doesn’t paint a rosy picture for investors. Twitter is significantly dependent on advertising. Hence, slowing user growth rate amid increasing competition for ad dollars from much larger players like Facebook and Google doesn’t bode well for the stock. Further, increasing investments on product development and costs related to international expansion will remain an overhang on profitability. Nevertheless, the company is benefitting from strong growth in international market and video advertisements. Twitter’s focus on boosting user growth rate and engagement levels by taking various measures like making tweeting easier for people and more expressive. These factors are expected to help in improving the user growth rate going forward.

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