The growth of Twitter’s user base has dramatically slowed down in recent years. However, investors overlooked the stagnant level of users as the tech company constituently increased its advertisement revenue.
Twitter’s numbers are becoming less and less impressive by the quarter as the social media behemoth, Facebook, and other companies are finding innovative ways to spur ad revenue growth. Twitter simply has not kept up with its silicon valley neighbors in this regard.
The stock plummeted this week when the company released disappointing financial reports. This report for Q1 was scheduled to be released after the close of the market Tuesday. However, due to a technical glitch, Selerity, was able to obtain the reports several hours early. Twitter stock took a nose dive before they quickly halted trading. The price of shares fell even further after the results were fully released. By the market’s close, Twitter shares fell by nearly twenty percent.
The report showed that the company’s revenue increased by nearly seventy-five percent since the beginning of 2015. However, this growth was less than that of both Q4 of 2014, and the industry’s predictions. Twitter leadership believes this dip in revenue is due to an advertising model they introduced this quarter. The cost of ads is based on the result of a click, instead of just the click itself. There is still debate as to whether this advertisement model will last in the long run.
Many industry analysts expect CEO Dick Costolo to be axed as result of the meager results since he began his post two years ago.
The company announced that just more than 300 million people use Twitter once or more per month during Q1. This increased from the 290 million users at the end of 2014. The future may be bleak for Twitter if executives are unable to figure out how to increase its user base or the amount of advertisement revenue generated.
Twitter’s revenue for the first quarter stood at $430 million.