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Twitter's user growth goes nowhere and the stock is collapsing

Twitter's user growth goes nowhere and the stock is collapsing
From TechCrunch - July 27, 2017

The small nice-ish story Twitter had going for itself for the past few quarters was that, at the very least, its monthly active users were growing quarter-over-quarter.

While MAUs might not be the right number to look at these days, for better or worse its one of the core metrics that Twitter is judged on for nowand that didnt pan out when it reported its earnings today as its users were flat quarter-over-quarter (and up around 5% compared to the same quarter last year). Perhaps more importantly, the companys MAUs in the United States fell slightly though the loss was made up by international users.

So, in very Twitter fashion, the stock fell on its face as it dropped more than 8% after the report came out. Heres the money chart:

The rest of Twitters business looked more or less fine, but it seems that Wall Street was still relying on Twitter to continue that even small user growth. Its revenue is still falling, coming down to $574 million as its advertising business continues to decline. Its data licensing is still growing, but not yet fast enough (or large enough) to offset that decline. Twitter said it brought in earnings of 12 cents per share, while analysts were looking for earnings of 5 cents per share on revenue of $536.6 million.

Heres one reason why that number in the U.S. falling would be bad for Twitter: its probably its most efficient market (as it is for many other companies) in terms of monetization. Its U.S. users are a fraction of its total users, but they make up a majority of its advertising revenue. Its the same kind of problem that Netflix has had to grapple with as it tries to grow even as it may be reaching a saturation pointwhere everyone who could potentially want to use Twitter is already on Twitter. (The below is advertising revenue.)

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