Why Twitter’s Future Remains Dim

By Douglas A. McIntyre Updated Jan 12, 10:33AM EST · Published Jun 30, 6:50AM EDT

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Why Twitter’s Future Remains Dim — © Wikimedia Commons

Recently, there has been some excitement about Twitter Inc.’s (NYSE: TWTR) prospects. This started with buyout potential last October. More recently, the social media company announced it would start to live stream some sports events. However, Twitter still has little chance to build its ad base enough to have super-charged revenue growth and substantial profits.

Twitter may be the best known failing company in the world. Donald Trump’s presence and the dozens of celebrities who use the service keep Twitter in the headlines endlessly. So do the company’s serial plans to turn itself around. None of these has shown much promise.

Almost lost in all the exposure the company receives are its dreadful financial results. Many investors believed that its most recent earnings announcement showed steps in the right direction. This is hardly the case, at least if Twitter wants to prove it is on the path to Web 2.0 growth status. The highlights of the earnings announcement:

The company posted first quarter revenue of $548 million, down 8% year-over-year. Quarterly GAAP net loss was $62 million, or ($0.09) per diluted share, with quarterly non-GAAP net income of $82 million, or $0.11 per diluted share. Average monthly active users were 328 million for the quarter, up 6% year-over-year and compared to 319 million in the previous quarter. Average daily active usage grew 14% year-over-year, an acceleration from 11% in the fourth quarter, 7% in the third quarter, 5% in the second quarter and 3% in the first quarter of 2016.

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Much larger rival Facebook Inc. (NASDAQ: FB) continues it amazing growth, and recently it reported that its user base reached 2 billion people. Twitter is stuck just above 300 million.

Twitter also has the problem that people can only spend so much time on social media, even those who spend hours a day. The competition for time of use is fierce. Twitter not only has to battle with Facebook for attention. WhatsApp, Instagram and Snap Inc.’s (NYSE: SNAP) Snapchat each have hundreds of millions of users.

Twitter’s shares have risen to $17.65, up from their 52-week low of $14.12. That puts its market cap at $12.8 billion. Bu it is a sucker rally.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.