It’s hard for the small core of Twitter addicts to accept, but Twitter just isn’t popular enough to be successful. In fact, Twitter is losing customers.
The social media company reported Wednesday that it lost 2 million users in the last three months of 2015. Shares plummeted as much as 12% in after-hours trading.
Twitter had 305 million active users by the end of 2015. By contrast, Facebook has 1.6 billion. Google has eight products with over 1 billion users each. Even Instagram surpassed Twitter in September, growing to 400 million users.
Though Twitter has been able to effectively generate sales from sponsored tweets and partnerships, it’s growing at a snail’s pace. It’s still a relatively niche product that hasn’t been able to expand its reach the way that its rivals have.
New management, products, designs and features haven’t done much to move the needle. Twitter’s growth has stagnated, and it’s nowhere close to turning a profit.
Twitter is aware of the problem and has launched a slew of new products to address the issue. But it’s left to be seen just how much these products, including Moments and Highlights, will capture users’ and advertisers’ attention.
Twitter announced Wednesday that it is testing a new algorithm that will change the chronological order of feeds, hoping to appeal more to casual users who aren’t obsessively keeping up with thousands of tweets in real time.
Meanwhile, Twitter’s management is in turmoil. The revolving door of executives continues to spin, and the company recently announced its product, engineering, media and HR directors are all leaving for greener pastures.
New board members are expected to come to the rescue soon, though Twitter did not announce changes to the board in conjunction with its financial statement, as many analysts had predicted.
Rumors continue to persist that Twitter is up for sale.
Sales
Fourth quarter of 2014: $479 million
Fourth quarter of 2015: $710 million, up 48%
It wasn’t all bad news last quarter. Twitter reported record sales. The company continues to succeed in its advertising initiatives. The company said it had 130,000 advertisers by the end of the fourth quarter, up 90% over the previous year.
But the company said it expects sales growth to slow in the current quarter. It predicted that revenue will be between $595 million and $610 million this quarter, far below the median forecasts of analysts surveyed by Thomson Reuters.
Profit
Fourth quarter of 2014: – $125 million
Fourth quarter of 2015: – $90 million, 28% improvement
Twitter continues to lose money. Though its losses narrowed, it shows no signs of turning a profit.
Active customers
Third quarter of 2015: 307 million
Fourth quarter of 2015: 305 million, down less than 1%
Twitter lost 2 million customers in the last three months of the year. Compared to a year earlier, Twitter’s customer base grew by just 6%.