Twitter shares fall as it prioritises fixing platform over user growth

Twitter shares fall as it prioritises fixing platform over user growth

Twitter shares fall as it prioritises fixing platform over user growth

This month many high-profile Twitter users, including US President Donald Trump and former president Barack Obama, saw a significant drop in their follower counts. Amid Twitter's efforts to improve conversations on the network, it was criticized earlier this week by Republicans for "shadow banning" or hiding some users' contributions. It's also possible that Facebook's disappointing quarter, from an investor expectations perspective, compounded the negative reaction to Twitter's earnings. Monthly active users have been lingering around 330 million for a year now, and the shareholders weren't pleased with the lack of progress, as evident from Twitter's stock price which is currently down 15.28%, according to Mashable.

But some say Twitter's unique position as a real-time network that allows users to follow news and events will eventually pay off. RBC Capital Markets analyst Mark Mahaney said in a note this week that "Twitter operates one of the largest and most influential social networks now in existence", and it is "providing meaningful value to users".

Twitter reported its third consecutive profitable quarter Friday, with net income of $100 million in the most recent three months, compared with a loss of $116 million in the same period a year ago.

The user outlook came as Twitter reported higher-than-expected revenue thanks to the FIFA World Cup, video ads and booming global ad revenue.

The average number of spam reports it received through the reporting flow continued to drop - from an average of approximately 25,000 per day in March, to approximately 17,000 per day in May.

Twitter had 335 million monthly users in the quarter, below the 339 million Wall Street was expecting, and down slightly from 336 million in the first quarter.

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Twitter said in a blog post in early July that weeding out accounts would not hurt metrics because the accounts would mostly be inactive. Both the slower growth forecast and heavier spending reflect problems largely of Facebook's own making.

The company's monthly active users were up 11% year-on-year but growth had fallen flat in the United States and Europe, also in part down to the roll-out of GDPR.

During a conference call on Friday with analysts, CEO Jack Dorsey told listeners that Twitter was continuing to invest heavily in the improvement of the platform's health, calling the investment the right thing to do not just for Twitter, but "for society as a whole". Financial analysts had estimated the revenue to come in at $US698 million.

The micro-blogging platform reported $711 million in revenue - an increase of 24 per cent year-over-year. "Last year's Q2 created an incredible buying opportunity in the stock".

The fall in users is a result of "prioritizing the health of the platform, and, to a lesser extent, GDPR", Twitter said, referring to Europe's General Data Protection Regulations that limit how internet firms can handle user data. It was attacked for allowing third parties access to user data.

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