Twitter Inc. User Growth Not Much Helped By World Cup: Costolo

Twitter Inc. (NYSE:TWTR) CEO Dick Costolo admitted that the World Cup was not a major factor in driving user growth over the platform. Following his comments, the stock tumbled approximately 13% in pre-market trading Tuesday.

Not much help from World Cup

Back in July, the micro-blogging site launched a special on-boarding feature for new users who created Twitter accounts during the planet’s biggest sporting event.

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However, Costolo acknowledged during the third-quarter earnings call that there was little effect on the monthly active users. Even though Twitter is still expanding, the growth rate has become slower than before. In the third-quarter, the company added just 13 million users, and of those, only 3 million were from the United States. The company has not added more than 3 million Americans in a quarter since 2012, says a report from Business Insider.

“But we didn’t see an impact on monthly active users,” Costolo told during earnings call.

Earlier, Costolo said that he expected a rise in user engagement during the World Cup, which is not same as adding new users. It is the monthly average users that are supporting the stock price currently, and the greatest concern is that MAU growth is declining. In the third-quarter of 2014, MAU growth for the company came in at 4.8% compared to 6% in the second-quarter and 4% in the first-quarter of 2014. The drop in MAU was seen even after the World Cup final.

Q4 to be a real test for Twitter

Costolo said, “in Europe there was no change in monthly active user growth over the time of the World Cup. In fact, the monthly active user growth slowed in line with expected seasonality in each successful month of the World Cup.”

Year over year growth was even dimmer, indicating the fragile condition of Twitter Inc. (NYSE:TWTR). Users increased 23% in the third-quarter of 2014, whereas in the previous year the growth was 39%. The World Cup was during the second and third quarters, and Twitter saw an increase in the engagement in both quarters. However, there will be no such event in the fourth-quarter. This would be a real test for Costolo, who is moving ahead with steps such as new senior management and a simplification of the user interface.