When Twitter went public last year stakes were high and after the initial roller coaster ride it had in the markets stock price of Twitter started falling gradually.I was wondering why the stocks are not doing good and started exploring the reasons for Twitter’s growth story heading downwards. The first reason I stumbled upon is the rate at which Twitter is increasing it’s monthly active user base is not very promising comparing with other competitors in the social world.Twitter has reported decline in user growth and states that the biggest challenge in front of them is to focus on improving their monthly active user base. Last year Twitter had projected that by end of 2013 it would reach around 400 million monthly active users but at year end reported only 241 million monthly active users. The below chart clearly shows that Twitter’s year on year monthly active users growth rate is going down very quickly.
Next let us take a look at the revenue statistics. Twitter’s major source of revenue is through Promoted tweets, Promoted trends and Promoted accounts. During the fourth quarter of 2013 Twitter beat the market forecasts and reported sales of $243 million up by 116% from the same time last year.For the current quarter Twitter has projected it’s revenue to between $230 to $240 million which is lesser compared to the last quarter and the main reason behind this projection is that Twitter think’s that their active monthly user’s rate is going down which will have an impact on their revenue.
The above statistic clearly shows that Twitter’s growth story is heading downwards and Twitter has long way to catch up with its peer’s like Facebook which is going strong with its recent acquisition of Whatsapp.To be in the social competition Twitter need to come out of innovative way’s to increase it’s monthly active user base.The key for Twitter’s future and it’s investors lies in on how quickly they can turn around the monthly active user’s growth.Share me your thoughts on this and what do you think Twitter should be doing to increase it’s monthly active user base?