On Monday, Twitter reported its user engagement had dropped by 7% in the third quarter despite its user base having grown by 23% in the same quarter. This news caused Twitter’s stock to drop by more than 9%.
The news keeps getting worse for Twitter, as the company also estimated its fourth-quarter revenue may not meet Wall Street’s targets. Wall Street had high expectations after Twitter surprised them in the second quarter by growing its user base by 24% worldwide.
Twitter had some momentum after its shares gained almost 19% since July. Investors have raised concern over Twitter’s defining usage as other social media platforms and messaging services rise in popularity.
Twitter executives have pointed out that the social network has many more users consuming content on the site who are not being recorded because they have either not signed up or logged in. Twitter has 284 million users, but there’s allegedly hundreds of millions who visit the website without logging on.
That may sound great, but what investors are truly concerned about is engagement. If users have either not signed up or not logged in they are not actually engaging with the network, which makes those numbers less valuable to investors.
Despite all these engagement numbers trending downwards, Twitter reported revenue more than doubled to $361 million in the third quarter, beating an average forecast for $351.4 million. For the upcoming holiday season, Twitter has projected sales of $440 million to $450 million, versus expectations for around $448.8 million.
So when you look at the bottom line, it’s not all doom and gloom for Twitter. Are you engaging on Twitter less frequently than you used to? Why do you think engagement dropped so significantly from quarter to quarter. I’d like to hear your thoughts in the comments section.