Twitter Floundering Post IPO

Twitter went public on Nov. 7, 2013, and while the share price isn’t doing too badly, there have been a lot of knocks for the company. Ad revenue is falling, user growth may be slowing down, and the company posted a loss for its first few months on the stock exchange. Twitter published its first annual financial results on March 8, and the company is losing money. The reason for not breaking even may have been because of a patent negotiation between Twitter and IBM. Overall, Twitter posted a $34.3 million net loss, and their payment to IBM for 900 patents was $36 million. So close, yet so far from being profitable. Getting to profitability may be an uphill battle. The annual report also contained some damning statistics about Twitter’s ad revenue. According to Quartz, the price of Twitter ads declined 18 percent, and since the start of 2012, ad prices are down 81 percent. Twitter advertising just isn’t giving companies the value they want, and that’s driving the price through the floor. “As we continue to optimize for advertiser value and the overall user experience, the cost per ad engagement may continue to decline over time, and we expect the cost per ad engagement to decline in the near term,” a Twitter spokesperson told Quartz. But this is something that’s been happening for the long term. If Twitter is unable to stabilize that ad rate, it could see its chances of profitability slip away entirely. Perhaps most damning, Twitter user growth is is starting to plateau. Felix Richter, media relations manager for Statista, charted Twitter’s falling growth rate. The last significant upturn in user growth for Twitter was in Q4 of 2011, with 100 percent growth of U.S. users and just over 120 percent growth of non-U.S. users. But as of Q4 2013, growth is 20 percent for the U.S. and less than 40 for non-U.S. Twitter needs to shake itself out of this funk if there’s any way it can reach profitability. But maybe it’s not a funk. Richter points out that when Facebook dropped below 30 percent growth, it already had 900 million users. Unless some huge sea change happens, it looks like Twitter has mostly attracted as many users, and ad dollars, as it’s going to. Related: Courtesy of our sister site, AgencySpy, Op-Ed: Filling in the $7.5 Billion Gap – What Marketers Want to See in a Twitter Redesign Image credit: Podknox

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Twitter Floundering Post IPO

Ad revenue is falling, user growth may be slowing down and Twitter posted a loss for its first few months on the stock exchange.

Kimberlee Morrison

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Kimberlee Morrison