Twitter co-founder Ev Williams believes the MAU metric is not the only important way to judge the success or failure of the company
Twitter co-founder Ev Williams blasted Wall Street on Wednesday, jabbing investors for focusing only on the monthly active user metric. Williams believes counting the number of people who log in to the service every month is not the most important metric to measure the success of Twitter.
MAU not that important?
At the Code/Media conference in Laguna Niguel, Williams told Re/code Co-Executive Editor Kara Swisher that Wall Street “does not have a sophisticated understanding of what creates value in this world,” and, “Hopefully, that will improve over time. That’s a conversation I’m trying to start.”
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Williams, who is also CEO at Medium, has not been a fan of this metric. Williams was not at all impressed when in December, Instagram overtook Twitter by crossing the 300 million user mark.
“Saying Instagram’s bigger, or they have more people sharing pictures, that’s irrelevant,” he said. “You might as well say more people watch TV. I’m not trivializing TV, I’m just saying it’s not relevant to how many people are using Twitter.”
Williams argues that even though Twitter may be slow in terms of MAU, it adds value in numerous other ways like serving as a source of news and giving everyone a voice. The executive added that comparing Twitter and Instagram is not valid, as both serve a different purpose.
In the last quarter, Twitter added just four million new MAUs, which was below analysts’ expectations. In general, analysts use the monthly active user base (MAU) to analyze the company’s growth. It’s not that analysts use the MAU metric only for Twitter; for Facebook, the same standards are used, but Facebook never complains.
Shifting sentiments toward Twitter
Despite the fuss about the MAU metric, we could see a positive shift in analysts’ sentiment towards Twitter. In a report on Feb. 17, MKM Partners managing director Rob Sanderson said he thinks the micro-blogging company is the large cap internet stock to own this year. Sanderson raised his price target on Twitter from $61 to $62 per share.
Referring to Twitter as a “polarizing stock,” the analyst added that investors may turn positive on the stock, but sustainability will remain a big concern. However, he feels that the majority of investors believe Twitter is the only stock with significant upside potential in its sector.