3 Reasons Why Twitter Is Crashing Down
Twitter is currently facing a critical moment with the company's fourth quarter results. And as the never-ending litany of woes continue to plague Jack Dorsey's social media service company, the changes made appear no closer to turn the company around.
In a period where investors are avoiding riskier stocks in a volatile market, Twitter could sink even more if earning continue to plummet. And based on the company's fourth-quarter results, Twitter showed slower growth, which analysts said is not enough, USA Today reported.
So, as investors and analyst fear the end of Twitter, here are three reasons why the company might be crashing down.
1. Twitter stocks were down
Following the initial drop of about 13 percent when the company's fourth-quarter results were reported, Twitter shares took a plunge for almost 5 percent at $14.25 in after-hours trading on Wednesday. According to Business Insider, its stocks have been pummeled, declining more than 70 percent from its 52-week high.
2. Q4 Slowdown
On Wednesday, Twitter explained to its shareholders that the company's growth was hurt by "organic" regressions, which were partially because of the fourth quarter "seasonal trend." However, the company stresses that things were picking back up in spite of the sluggish improvements.
"We've already seen January monthly actives bounce back to Q3 levels, the company said in a letter to its shareholders. "We're confident that, with disciplined execution, this growth trend will continue over time."
3. Twitter user growth barely increasing
The company's user growth came to a standstill during the last quarter of 2015. And in the United States, its users decreased from 66 million to 65 million. In addition, the company's global audience also fell at the end of the year to 305 million from 307 million in Q3, with the exclusion of text messaging.
Since the number of people using Twitter is barely growing, investors are in panic, Bloomberg Gadfly noted. While CEO Jack Dorsey has been discussing his plans to make Twitter more user-friendly and engaging for newcomers and longtime loyalists, the company's financial results proved that it's just a "niche plaything" instead of being a universal online service like Facebook and Google that earn well.
Meanwhile, Twitter emphasized that they are taking additional steps to turn the company around. However, it told its investors not to expect immediate results. Twitter Executive Chairman Omid Kordestani even told analysts that the changes will take time before the company can create long-term shareholder value, as per Reuters.
Due to Twitter's bleak Q4 report, the hashtag #RIPTwitter was used almost 20 times per minute on Wednesday. The hashtag also had been the top trending item in the United States over the weekend, when rumors of the changes first circulated.
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