Twitter Is Tanking, And Wall Street Is Freaking Out — But We Shouldn't Write Twitter Off Just Yet, And Here's Why
Is this the death of Twitter, or is the super-successful micro-blogging platform just feeling some growing pains? New financial reports show a sharp decline in Twitter's stock shares, which dropped 11 percent to just $37.80 on Wednesday. For Wall Street, those numbers are, well, not very good. (For some comparison, Facebook's current stock price is around $58.) Considering that even the media gets its news from Twitter these days, it feels strange to hear that Twitter is doing poorly both on Wall Street and online: Twitter not only lost more than $130 million in the first three months of 2014, but is also having trouble gaining new tweeters. User growth has been slow over the last few months, with only a six percent uptick in new Twitter profiles.
But hold on — Twitter is not a graveyard of unfunny jokes and Pharrell's hat parody accounts just yet. Twitter pulled in 255 million active users last month, which sounds like a fair amount. In fact, it's much higher than the 204 million in the same quarter last year. However, financial experts were expecting 257 million active users, so Twitter is a bit under its targeted user reach. As a result, many experts are beginning to question the company's potential.
Is Twitter really lacking potential? After all, 550 million tweets are sent every day, according to the company's tally. In terms of popularity, it seems like Twitter is doing pretty well. However, Twitter has placed some lofty expectations on itself recently — mainly, a push to become the next Facebook.
If you noticed that Twitter's new profile look is awfully similar to Facebook's current timeline, it may not be a coincidence. Twitter and its investors had high hopes that the company would become as big — or even bigger — than Facebook, which currently leads the pack among social media platforms, boasting 1.28 billion monthly active users.
To catch up with Facebook, Twitter needs to see an increase in user engagement on a monthly basis. According to Twopcharts, which tracks Twitter stats, there are an estimated 996.5 million registered Twitter accounts. But with only 255 million active users per month, that means there's a whole lot of abandoned Twitter profiles out there.
According to Mashable, those dead accounts are reportedly spooking investors and financial analysts, even though Twitter actually had revenue growth in the last quarter. Shyam Patil, a Wedbush analyst, told the site:
Monetization was strong, however, total users and timeline views (TVs) came in modestly below expectations and continued to exhibit decelerating growth. While management remains confident in its initiatives to drive re-acceleration in user growth and TVs overtime, the underperformance is likely to cause concerns around the company's long-term growth potential and weigh on the stock.
To understand Twitter's slowed growth — and Facebook's continued active-user success — it may help to look at who regularly uses these social media platforms. According to 2013 data from comScore, Twitter is heavily favored by people younger than 35. Meanwhile, the number of teens on Twitter has been steadily increasing — in 2012, 26 percent of teens used Twitter, up from 12 percent in 2011.
A 2013 report from the Pew Research Journalism Project also stated that Twitter news consumers tend to be younger, mobile-savvy and more educated than people who get their news via Facebook. Although only 16 percent of all U.S. adults use Twitter, nearly half of those who consume news through Twitter are between 18 and 29 years old. In comparison, just 34 percent of 18 to 29 year olds use Facebook as a news source.
Judging from both the user base and content, it's safe to say that Twitter and Facebook serve different functions. For instance, Twitter's popularity among journalists means it works well as a primary news source. And as Forbes recently pointed out, Twitter may never become Facebook because it's missing "a hook":
Twitter can mimic the look and feel of Facebook all it wants, but it can’t steal the hook that got you on in the first place: that a friend told you to sign up so you could stay in touch. For Twitter, this represents the very real threat that it won’t realize its promise.
So what's Twitter to do? Maybe the company should stick with what — and who — works: teens, 20-somethings and hashtags.