Twitter Fails to Reignite User Growth

For the fourth time since its IPO in November 2013, Twitter reported its quarterly earnings yesterday. Even though results were roughly in line with expectations, shareholders were disappointed and the company’s stock price dropped more than 10% following the release.

Twitter managed to more than double its revenue to $361 million and posted a net loss of $175 million that was mainly caused by stock-based compensation expenses. While these aren’t bad results, once again it was the company’s lackluster user growth that left its shareholders disappointed.

Twitter now has 284 million monthly active users, representing a 23% increase over last year’s September quarter. The fact that user growth continues to decelerate makes one thing increasingly clear: Twitter is no second Facebook and will never be as big. When Facebook had roughly as many users as Twitter now has, it was still growing at a rate above 200%. Put another way: once Facebook’s growth rate dropped below 25% its user base had long surpassed one billion people.