Twitter Inc (NYSE:TWTR) shares soared 21.85% to $47.02 in early trading session on Wednesday. The company reported better than expected second-quarter results on Tuesday. The microblogging company’s revenue skyrocketed 124% YoY to $312 million, beating the Wall Street consensus of $282.44 million. Twitter reported non-GAAP earnings of two cents, while analysts were expecting a loss of one cent.
Twitter Inc (TWTR)’s master plan to become as big as Facebook
Most importantly, the San Francisco-based company added 16 million new monthly active users (MAUs), taking the total to 271 million. Analysts expected 265 MAUs by the end of June. Investors were worried that Twitter’s user growth is slowing, and its growth curve doesn’t resemble that of Facebook Inc (NASDAQ:FB). That means it would take Twitter decades before it can boast of 1.3 billion users that Facebook has now.
However, Twitter CEO Dick Costolo believes that we have been counting wrong, reports Jeff Bercovici of Forbes. The official figure of 271 million monthly active users (MAUs) is just one segment of the company’s audience. There is a large number of “logged out” unique visitors to profile pages, who makeup the secondary audience. And then there are millions of “syndicated” viewers who see tweets projected on TV screens or embedded on third-party websites.
How will Twitter monetize its secondary and tertiary audience?
Dick Costolo said at the earnings call, “Twitter is everywhere.” A large number of people come to Twitter looking for content or the latest news. And lots of them decide not to log in. If you count those people up, you’ll get a total user base two to three times higher than 271 million, claimed Costolo. He added that the management will position Twitter to reach the largest audience in the world. Costolo aims to make the company “the largest information network in the world.” That formulation skirts the line between social networking and a media company, enjoying the advantages of both.
However, Twitter is currently making no money off its secondary and tertiary audience. The syndicated and logged out user don’t see any ads. That’s because the company knows little about those people to serve the suitable ads. But Dick Costolo insisted that there are “tremendous signals” about the behavior and interests of such users that will eventually make them an integral part of its user base.