On Thursday, Twitter Inc. (TWTR.N) posted the slowest revenue growth since four years ago, sending its Shares down more than 10% on fears that Snapchat and Facebook Inc. (FB.O) were winning the war for advertising.
Since last year, advertising revenues fell and a 4.0% year-on-year rise in users to 319 million fell short of Wall Street forecasts as well.
The social platform has struggled to find a formula that will attract new users or advertisers but the lack of revenue growth has raised questions about Dorsey’s leadership (Twitters’ CEO) and whether the company would be bought by a bigger media firm.
Last year, financial markets speculated about a sale of Twitter but no concrete bids were coming. In a conference call on Thursday, Dorsey told analysts that Twitter was currently investing in machine learning and searching for ways to engage advertisers.
“It will take time to show the results we all want to see, and we’re moving forward aggressively. The whole world is watching Twitter,” he said.
However, the quarterly revenue growth was the slowest since Twitter went public and advertising revenue during the fourth quarter declined 0.5% year-over-year to $638 million, noting that the company said that advertising revenue growth would continue to lag user growth during 2017.
The election of Trump had been seen as a positive for Twitter, since the president uses the platform frequently generating news coverage.
The shocking part is that the Trump effect was zero. Their growth actually slowed during the quarter according to Thomson Reuters. COO Anthony Noto told analysts that Trump had broadened awareness of how the platform can be used, but that Twitter cannot rely on the president alone.
Twitter’s net loss widened to $167.1 million, or 23 cents per Share, in the fourth quarter ended Dec. 31, from $90.24 million, or 13 cents per Share, a year earlier.
The company’s adjusted profit, however, beat sharply lowered estimates.
Excluding various items, the company earned 16 cents per Share in the fourth quarter, beating the average estimate of 12 cents per Share.
Restructuring charges in the latest quarter ballooned to $101.2 million from $12.9 million a year earlier. Total revenue grew 1.0% to $717.2 million, missing analysts’ average estimate of $740.1 million, according to Thomson Reuters I/B/E/S.
Twitter’s user base in the fourth quarter grew to 319 million, less than the 319.6 million expected by analysts, according to market research firm FactSet StreetAccount.
Dorsey also faced concerns about his dual role as the chief executive of both Twitter and Square Inc (SQ.N).