February 6, 2014 was a bit of a bloodbath for Twitter Inc (NYSE:TWTR). After the social networking site reported its financial figures for 2013, its share price took an absolute hammering. And when one looks at the results that were reported this hardly comes as a huge surprise.
Vast losses for Twitter
Twitter Inc (NYSE:TWTR) was forced to report to the markets losses of $645m for 2013. The results reflected a significant slowing in the number of people signing up for the social media site over the last few years. Over the last quarter, the number of Twitters users grew by only 3.8 percent, indicating to investors that the site’s popularity might be about to plateau. Despite the fact that anyone and everyone has heard of Twitter, the company added just over 1 million users in the last three months.
The share price of Twitter Inc (NYSE:TWTR) was consequently hit, and hit hard at that. The social media network’s share price plummeted by more than 17 percent in after-hours trading, instantly slashing billions from the value of the company.
Prentice Capital Benefits From “15 Million New Robinhood Accounts”
Michael Zimmerman's Prentice Capital returned 3% in June, taking its year-to-date performance to 18.6% net of fees and expenses, according to the firm's June investor update, a copy of which ValueWalk has been able to review. Prentice Capital Benefits From "15 Million New Robinhood Accounts" Prentice employs a low net equity long/short strategy with a Read More
There was some good news in among the torrent of doom. Twitter Inc (NYSE:TWTR)’s first year as a public company ended with revenue increased over what was expected, with the social media company reporting total income of $665 million. This was actually double the revenue the company made during the previous financial year. However, the worth of the company is largely predicated on the notion that Twitter will be able to expand its mass market appeal and gain a bigger market penetration than its most obvious rival Facebook Inc (NASDAQ:FB). It must be said that Twitter is not in the same ballpark as Mark Zuckerberg’s site, though, as Facebook achieved revenue of $7.8 billion during the last financial year.
So what does the future hold for Twitter Inc (NYSE:TWTR), and how can it turn around these apparently disastrous results? It seems that the first port of call for the micro-blogging site has been an attempt to recruit a phalanx of advertising staff across Britain and Europe. This operation has been ongoing in recent months as the site attempts to attract top 100 UK advertisers with a new narrative for ad agencies and marketers that will locate Twitter in a central role for advertising campaigns.
The company is also branching out to try to create media partnerships. The specialist team tasked with working on this matter will be attempting to cultivate the wider use of Twitter Inc (NYSE:TWTR) by famous and notable celebrities such as athletes, actors, musicians and comedians. Of course, Twitter is perhaps possibly most associated with this already, but it seems that the think tank behind its future growth believes that creating even more buzz is going to be critical to its future success.
Complex interface criticized
Aside from the growth issues that Twitter Inc (NYSE:TWTR) has to deal with going forward, the site has also recently been criticized for undue complexity. This has even been acknowledged by the CEO of Twitter, Dick Costolo, who has admitted that the user interface is currently somewhat confusing for new users. While emphasizing that he expects the site to grow and get better in the future, he also conceded that Twitter must do more to make use of videos and photos.
Additionally, he stated that the crosstalk feature used in the program needs to be expanded. The company are also working implementing topic-based searches as opposed to hashtags, and in improving Twitter Inc (NYSE:TWTR)’s following and listing features to make the experience more intuitive for the millions that use the social media site every day.
So what else can Twitter Inc (NYSE:TWTR) do to convince the market that it is a business with a viable growth model? Aside from its new topics emphasis which is to be implemented in the coming year, there are murmurings that Twitter will be launching a brand new ecommerce initiative. When releasing Twitter’s earnings for the year, Costolo didn’t actually confirm these rumors, but he did hint that this new venture would go hand-in-hand with Twitter cards; a new technology which enables third-parties to create rich media. This would seem to be a sensible strategy for Twitter, as surely more big business engagement is necessary on top of the large user base of casual users that has unquestionably been built up.
Additionally, although Twitter Inc (NYSE:TWTR) obviously didn’t have the best financial year, it is worth emphasizing that this was its first year as a public company. This is still a very embryonic period, and though the markets can respond brutally to initial figures sometimes this disguises promising bubbling beneath the surface. Thus, it has been largely ignored that Twitter’s advertising revenue increased significantly during 2013, and ad revenue per user is also up. Twitter has also strengthened its position in the key mobile sphere, so there is hope for the company that they can build on that during the next financial year.
Ultimately, it is hard to imagine that such a prominent website, and a name known all over the world, can’t ultimately find a way to make money. The story of Twitter Inc (NYSE:TWTR) is far from over.