The cost of Twitter shares dropped on Friday, following the Facebook’s plunge for more than 22%. Twitter published a quarterly earnings report, which stated the number of active users decreased for 1 million users (down to 335 million people per month). The shares lost 19% of their value right after the publication, cutting 6.5 million dollars from Twitter capitalization during 2.5 hours.
Although Twitter finished the quarter with the profit of 100 million dollars unlike the previous year and also the revenue has been increased for 24% (up to 711 million dollars), investors are worried by acknowledging the fact that the social media’s rapid growth period is coming to an end, and there no chances to change the situation. These words belong to Macquarie analyst Benjamin Shakhetr.
Twitter has been reporting a shy-rocket growth of their users in the period of 2012-2015. The number of users rose from 100 million people to 300 million people. The company managed to add only 30 million users by the next two years and the figures stagnate during the last 5 quarters.
Although the U.S. President used Twitter as the internal and external policy instrument, there is no overall growth worldwide. Shakhetr says: “Even better quality of the product does not allow Twitter to attract more users”.
He also added that the scariest thing for the market was the Twitter’s forecast: the company expects a decrease in the number of active users for “several million people”.
The Twitter shares scenario was completely the same as for the Facebook dramatic outcome after the company published the quarterly report a day before.
The company has reported that the growth pace of the active audience has been decreased twice in the last quarter and became record low for the whole history of the social network. (1.54% versus 3.16% in the first quarter). At the same time, the USA audience has been stalling and the European audience has been decreased from 377 million to 376 million users.
The report “has spread fears on the Wall-Street, which could cause troubles for other technological giants”, GBH Insights analyst Daniel Eaves warns: “ The tech sectors investors are afraid that the nearest future will be unclear at least in the short-term period”.