Twitter Inc (NYSE:TWTR) investors have already been concerned about the slowing growth rate in its user base. That’s the biggest problem with the microblogging site. Twitter had about 242 million monthly active users at the end of 2013, and its growth rate decelerated to about 30%. In Q1, 2011, the San Francisco-based company’s user base grew at 118%. But the Statista chart below shows that the company’s growth rate has been tapering off at an alarming rate, indicating that it will have a hard time even coming close to Facebook Inc (NASDAQ:FB).
Twitter knows its challenges
While Facebook Inc (NASDAQ:FB)’s user base grew at less than 20% during the fourth quarter 2013, it has more than 1.2 billion monthly active users. Mark Zuckerberg’s company has grown so huge that it’s become impossible for Twitter Inc (NYSE:TWTR) to catch up. Facebook’s growth rate dropped to Twitter’s current level of 30% when it already had more than 900 million worldwide users.
At this year's inaugural London Quality Growth Investor conference, Denis Callioni, analyst and portfolio manager at European investment group Comgest, highlighted one of the top ideas of the Comgest Europe Growth Fund. According to the speaker, the team managing this fund focus on finding companies that have stainable growth trajectories with a proven track record Read More
Twitter Inc (NYSE:TWTR) realizes the challenge, which is to bring in new users and keep the existing ones engaged. Many users find its platform difficult to use. The company is trying hard to make it easy to operate. But users are not pleased with some of the UI changes the microblogging company made recently. On the other hand, Facebook Inc (NASDAQ:FB) has been much more aggressive in growing its user base. Mark Zuckerberg is joining hands with telecom companies to lower Internet tariff or provide free access to Facebook. That will help the emerging market population gain access and become familiar with Facebook.
Can Twitter even match WhatsApp?
To fuel its slowing growth, Facebook Inc (NASDAQ:FB) recently bought WhatsApp for a staggering $19 billion or $42 per user. More than one million new users are joining WhatsApp every day, and is expected to surpass one billion users very soon. Mark Zuckerberg knows that any company with a billion users has immense monetization ability. WhatsApp can touch that mark, but Twitter Inc (NYSE:TWTR) seems unlikely to reach one billion users.
Twitter Inc (NYSE:TWTR) shares ticked up 1.56% to $54.55 in pre-market trading Tuesday.