Twitter Inc (TWTR): All Its Efforts Are Just Not Bearing Fruits

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Twitter Inc (TWTR): All Its Efforts Are Just Not Bearing Fruits

Twitter’s first quarter earnings were less than expected. Analysts were expecting revenue to be around $607.8 million, but the company hauled in just $595 million. Considering such numbers, it wouldn’t be wrong to say nothing Twitter has done to improve the appeal of its core product over the last year has resonated,” says The Verge.

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Dismal numbers

Twitter Inc (NASDAQ:TWTR) added around 5 million users for a total of 310 million, which was more than Wall Street expected. But the additions were not enough to allow any significant transfer of advertising revenue from the tech giant like Facebook and Google.

Also for the current quarter, the micro-blogging firm is expecting revenue of $590 million, which is well below analysts’ expectations of $610 million. Its stock dropped by more than 12% after hours.

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What has Twitter (TWTR) done to improve itself?

Over the past year, the micro-blogging site launched Moments and a television ad campaign to become more approachable to the mainstream audience. Moments is a tab of highlights aimed at new users and curated by an in-house team.

Also management replaced CEO Dick Costolo with co-founder Jack Dorsey and also replaced “favorites” with “likes.” Even after replacing the CEO, the company’s profits are not seeing any positive change, and its chief competitor Facebook is stealing its executives as well.

Twitter Inc (NASDAQ:TWTR) also allowed longer direct messages, added polls, integrated Periscope into the timeline, and improved tools for better security and to report harassment and abuse. Another effort was the sorting of tweets by quality instead of recency.

Is Facebook to blame?

Analyst Ben Thompson notes that marketers have withheld their advertising dollars, and even though the micro-blogging firm regained some huge brand ambassadors, it still failed to make a platform like Facebook and Google. Unlike its rivals, Twitter is not good at direct marketing and hence, its revenues have taken a hit.

Twitter Inc (NASDAQ:TWTR) has often been touting the power of its live streaming app Periscope, but in the past eight months, Facebook has invested heavily in live video, and thus, the micro-blogging site has competition in this area as well. Also the social media giant copied some successful aspects of Periscope and has been diverting the attention of the media and celebrities from Twitter’s product.

When asked about Facebook, Dorsey said Twitter has been doing Live for ten years and that he believes, “We have a leadership potential in it,” before correcting himself to say, “A leadership position in it.” This slip of tongue says it all.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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