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Twitter Plummeted Over 12% as Q4 Earnings Reflect Stalling Growth

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Even as President Trump’s favorite platform of communication, Twitter’s (TWTR - Free Report) Q4 revenue growth could barely beat estimates. The company closed down Thursday over 12% to $16.41 per share after its earnings were released this morning, showing a mere 1% growth in revenue year-over-year.  

Though Twitter’s adjusted loss of $0.03 per share beat the Zacks Consensus Estimate of a loss of $0.11, the company reported revenue of $717.2 million, missing the Zacks Consensus Estimate of $737.7 million. Investor should also to be note the quarter, the company’s loss from operations is much larger this year compared to last year. Twitter reported a loss of $143 million this quarter, compared to $67 million during the same time last year.

What went wrong?

With Mr. Trump’s frequent usage of Twitter, people would expect a large growth from the company. Even President Trump’s tweets couldn’t persuade new users to sign up and advertisers to spend money on the social network service. Twitter reported a 4% growth to 319 million monthly active users year-over-year; however,Twitter’s Q4 had the least user gain in 2016 with only two million additional monthly active users. Revenue from advertising was also down slightly from last year’s $641 million to $638 million.

“We overcame the toughest challenge for any consumer service at scale by reversing declining audience trends and re-accelerating usage,” said Jack Dorsey, Twitter’s CEO. “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."

What now?

In its Q4 report, Twitter said they are looking to make Twitter a safer space for its users, invest in new products, such as live stream video and combining with the existing products, the company looks to have sustainable long-term revenue growth.

But the company is not addressing the issues that many analysts and news outlet said Twitter should focus on, like gaining new users. 

“They (Twitter) barely missed having a quarter revenue decline which is really quite scary for Twitter,” said Sarah Frier, from Bloomberg News. “This means that Twitter has had trouble persuading advertising to spend more money on their social media platform, given that they haven’t been able to increase the user bases.”

During this quarter, Twitter also experienced a reorganization of partnership, sales and marketing. The company reduced the number of sales channel from three to two.

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