Twitter shares fall amid concern about falling user numbers

Twitter’s share price fell close to 10% in on Thursday as record fourth-quarter revenues and the milestone of achieving its first full year of profitability failed to allay investors’ concerns over a drop in user numbers and a weak revenue forecast.

The social media company reported 321 million monthly active users in the fourth quarter, a decrease of 9 million year-on-year and 5 million lower than the previous quarter.

It blamed a number of factors, including the impact of a purge of millions of abusive accounts, a reduction in email notifications and complying with changes to data protection rules in Europe.

“Health is our top priority as we continue our work to help people find credible information and feel safe participating in the conversation on Twitter,” said the company’s chief executive, Jack Dorsey. “We enter this year confident that we will continue to deliver strong performance by focusing on making Twitter a healthier and more conversational service.”

The company said there was a 16% year-on-year decrease in reports of abuse on Twitter in 2018.

Positive results reported by Twitter included quarterly revenue of $909m, up 24% year-on-year and ahead of Wall Street estimates, and full-year profits of $1.2bn. In 2017, Twitter posted a $108m loss.

The company also revealed daily active user numbers for the first time, at 126 million, a rise of 2 million compared with the previous quarter. Revealing daily users makes it easier to compare Twitter with its social media rival Facebook, which has 1.52 billion, and Snapchat, which has 186 million. Twitter says its measurement is more stringent and accurate than those used by rivals as it only counts users it knows are actually exposed to ads.

The increase in daily user numbers is a positive for driving revenues from more engaged users. Total advertising revenue was up 23% quarter-on-quarter to $791m, with video ads representing more than half of sales.

However, Twitter’s 9.8% share price fall came amid investor concern about overall user growth as monthly numbers dropped, and disappointing guidance on first quarter revenues. The company said it expected total revenue of between $715m and $775m, the midpoint of which was below the Wall Street consensus of $762m.