Twitter Inc. (NYSE:TWTR) is a company that has been struggling for quite some time now and the struggles are for a very good reason. The company simply can’t seem to get its active user numbers to grow in a meaningful way. Now, as the company scrambles to try and get things in order, things only seem to be getting worse. Today, we’ll talk about its user growth struggle and what it has done to the company, as well as what we can expect to see from TWTR moving forward. So, let’s get right to it…
TWTR User Growth Is Dismal At Best
For more than a year at this point, investors have been eyeing Twitter’s user growth. After all, Twitter is a social network. So, without users, the company really has nothing. Unfortunately, the user growth has been minimal. As a result, early on in 2015 Twitter announced that CEO Dick Costolo would resign, leaving Jack Dorsey in his place on an interim level. Because TWTR couldn’t find a qualified captain to man its sinking ship, Dorsey announced that he would stick around for the long term. Of course, because Dorsey is one of the co-founders of the company, investors cheered the move… even though they shouldn’t have.
Things Have Gone From Bad To Worse
While investors cheered when Dorsey announced that he would be staying, they really shouldn’t have. In reality, his previous performance as the company’s CEO was dreadful and we can’t expect to see anything different this time around. In fact, since Dorsey became CEO of Twitter, things for the company have gone from bad to worse. Not only is the company continuing to struggle with regard to building its monthly active user numbers up, we’re starting to actually see declines in daily active users, the same thing that happened before MySpace fell off of the face of the earth. However, it’s not hard to get a good idea as to why we’re seeing declines in daily active users. Just take a look at what Dorsey has focused on since becoming CEO.
Over the past year or so, we have seen quite a few changes. The company has lifted character limits for advertisers, it has opened up new streams for advertisers, ultimately, it has made the experience much better… for advertisers. However, while Dorsey has been focused on advertisers, it’s clear that he hasn’t been focused on the real problem at hand… user growth. The bottom line is that until the company starts to focus on growing its user base, the problem is going to continue getting worse; especially if TWTR continues to work to show more ads to its already dwindling user base.
What We Can Expect
Moving forward, I have an overwhelmingly bearish opinion of what we can expect to see from Twitter. The reality is that the company lacks planning, focus and leadership. In order to see meaningful growth in the stock, investors are going to have to start seeing meaningful growth in active users. Considering what we’ve seen out of the company since Dorsey returned, that's not likely to happen any time soon.