As Twitter reports a slowdown in growth, what do the analysts have to say?

Social

by Amy-jo Crowley| 06 February 2014

Shares fell as much as 12% after releasing its first earnings announcement.

Twitter's slower growth is not a "serious concern" as the company expects to optimise user experience by making the site more appealing, according to a leading analyst firm.

The social networking firm said revenues for the quarter ending in December hit $234 (£149), up 116% year-on-year. But monthly active users grew just 3.8% to 241 million, down from the 10% growth seen in the first quarter 2013.

Brain Blau, an analyst at Gartner Research, told CBR expectations were very high as it is often compared with Facebook and that the slower growth wasn't a "serious concern".

"I fundamentally don't think that the slower growth is a serious concern as the company has plans to optimise the user experience and make the service more appealing.

"We have known that Twitter has had a user engagement problem, that was widely reported issue around the IPO. But I think is interesting that we are seeing some user growth over time, certainly that they did have user growth but it wasn't up to the high expectations for example from what we have seen from companies like Facebook, but I'm not sure that the comparison is fair either as they are in different phases of their growth."

He added: "The CEO stated that there were many efforts underway to make these changes, they appear to understand their shortcomings and have plans to mitigate them. He said they feel they have the right product configuration and as Twitter matures it will make these changes to raise engagement."

Patrick Salyer, CEO of Gigya, a California-based marketing company specialising in social media, said the results show a shift in the users' interest in engaging with "news-led issues".

"Twitter is arguably the most effective network for sharing news stories and having conversations with other users and celebrities around specific topics and this is a phenomenon that is fuelling user subscriptions to the site," he said.

"Our own research shows that in Europe, 45 per cent of social media users share content using Twitter with Facebook very narrowly ahead on 47 per cent. The research, along with Twitter's growing global user base and revenues, demonstrates that the ways people now share content via social media is changing and it's getting more sophisticated."

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