Twitter publishes strong results, but disappoints markets

Twitter publishes strong results but disappoints markets

Twitter believes, and its results show that it truly does, for the moment, in holding on to its dream of acquiring mass audiences and winning popularity like its California competitor Facebook. The microblogging site published Monday, October 27, positive quarterly results, with revenues doubled to $361 million, up 114% year on year, and net income of $7 million (or one cent per share). It should make nevertheless much more to satisfy the markets are struggling to digest than a value growth making as little a profit: Twitter share was down almost 10% in the wake of the results, before recovering to close at -2.78%. A “logical” correction, estimates a specialist industry analyst; “In the end, investors expect a company that explains its strategy to make profits and pay dividends.”

However, revenue growth shows that the network’s strategy, which aims not only to accelerate the acquisition of new subscribers (284 million monthly active users at the moment), but also to increase their engagement rate (“foster” a tweet, “retweet” a conversation followed, etc.) begins to bear fruit. It is a matter of survival for the network.

“The considerable notoriety of Twitter has so far not been generated by the number of users, highlights Nate Elliott, an analyst at Forrester Twitter; if the company fails to elicit the commitment of its members, there is a risk of losing their attention that might wander off elsewhere.” In other words, advertisers and advertising agencies will cut off investing.

There is the rub, and a long-time one: the site does not quite attract brands, they are not spending enough money, and the return on investment is not yet up to the expectations. At least compared to its competitors in this segment, Google and Facebook, the first increased its earnings almost by 32% in 2014 of advertising revenue, the second reaped 8% when Twitter will settle for less than one percent of income, according to forecasts of e-marketer.

A Seduction Of “Geeks”

To catch up, the little blue bird has several ways: October 22, the company organized its first conference for developers, with the working title of “Flight”. The conference will take place in San Francisco (California). During this event was brought out Fabric, a platform for application development.

The purpose of this event is as follows. Developers take ownership of the platform and create new features that will attract customers and generate interest and hopefully Twitter will see an increase the time spent on the site and the number of conversations that are conducted. There are for now too many accounts, probably around two-thirds, that are dormant, spoofed or fed automatically by “robots”.

Fabric combines three tools. Crashlytics (actually bought as a start-up in 2013) allows identifying bugs to resolve and encourage the adoption of applications by users. Twitter Kit allows developers to integrate content from Twitter easier (for example, a mobile application of a newspaper that wants to integrate tweets of its reporters in their articles online). The MoPub Kit is itself dedicated for generating advertising revenue on applications.

Anthony DiClemente, an analyst at Nomura, says that Fabric is quite likely to “contribute to income from movable and could open the door to new sources.” According to him, MoPub could make the difference, increasing the mass of advertisements related to Twitter, but not hosted on the site. This new capability could “give Twitter some leeway to increase the price of its advertisements.”

Another novelty presented at the developer conference, which could be one of the most important, is the Digits feature, which allows you to log into Twitter via a phone number, not through an email address. The forgotten or lost passwords, closed email accounts are a significant obstacle to the use of Twitter. And connection through another social network (Google +, Facebook, etc.) raises the suspicion of a growing number of Internet users, anxious to preserve the confidentiality of their online business.

The conference was seen as a form of response to critics who point out that the heart of the site has changed very little over nine years of existence. In fact, the novelties presented at Flight do not bring real change to the way the “twitters” lambda evolves on the network: many analysts expect a more distinct evolution of Twitter interface.

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