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Business

Twitter fails to turn Trump tweets into cash

Shares in the short messaging service have slumped after it reported sluggish revenue and user growth that led to a widening net loss in the fourth quarter despite the new US president's extensive use of it.

In morning trading at Wall Street in New York on Thursday, Twitter shares tumbled more than nine percent as investor hopes are fading for a rebound in growth at the messaging platform.

Twitter reported a net loss in the fourth quarter of $167 million (156.3 million euros), after a $90-million shortfall in the same period a year ago. Revenue in the quarter rose a modest one percent to $717 million.

Moreover, in the closely-watched area of user growth, Twitter ended 2016 with 319 million monthly active users, a gain of four percent from a year ago and only two million more than the prior quarter.

Advertising revenue was down slightly from a year ago at $638 million, with revenue in the important US market falling five percent. For the full year of 2016, Twitter lost $456 million on revenues of $2.5 billion. 

    

Growing impact?

Despite the unimpressive result, Twitter CEO Jack Dorsey remained upbeat about the company's long-term prospects, claiming "the whole world is watching Twitter."

"While we may not be meeting everyone's growth expectations, there's one thing that continues to grow and outpace our peers: Twitter's influence and impact," he said in a statement, adding that the social media network carried the world's "most important commentary and conversations" mobilizing people into action.

However, Twitter has never reported a profit so far, which is why it is eager to revamp its offerings and expand beyond its core base of politicians, celebrities and journalists.

Some analysts had expected a rise in Twitter use following the election of Donald Trump, who is an avid user of the platform and frequently uses it to offer his views on policy.

Outlook improving

Twitter's daily active usage grew for the third consecutive quarter, overcoming declining audience described by CEO Dorsey as "the toughest challenge for any consumer service at scale."

The company is now aiming to become profitable in 2017. "We're hearing positive feedback from our ad partners about our continued acceleration in audience growth and engagement," said chief operating officer Anthony Noto. Revenue growth would, however, continue to lag audience growth, he added, due to the sales cycle, and could be further impacted by the "escalating competition for digital advertising spending."

In a research note, Richard Greenfield of BTIG research firm said he saw positive signs of growing user engagement on Twitter because the service had been "thrust into the global Zeitgeist" after the US presidential election.

"Not only is President Trump actively using Twitter to communicate directly with the American people, his tweets are impacting consumers all around the world," he added. Therefore, Greenfield believes that Twitter's results may improve in the course of next year.

Watch video 01:15

Turbulences at Twitter

uhe/sri (AFP, Reuters, dpa)

 

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