Twitter Stock Plunges on Weak Forecast

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"The dip in MAUs also shouldn't be a surprise as Twitter publicly announced in mid-2018 that it was making more-aggressive efforts-though the work is far from done-to clean up the bots and fake users on its social network", Forrester analyst Jessica Liu wrote in an email to Barron's.

While the new figure reveals Twitter's lesser size in comparison with other social networks, the number of daily users continues to grow, with a 9 percent increase in daily active users compared with the same period previous year.

However, statistics also showed that the number of monthly users fell by five million compared with the same period a year earlier - and now stand at 321 million.

Investors' concerns over the weak forecast overshadowed strong fourth-quarter results for the social media company that included a 24 percent jump in total revenue, helped by growth in its video advertising business.

Equity markets reacted to the grim news by kicking Twitter's shares into the basement by 8 percent in early trading.

Twitter's report was able to show some encouraging bang-for-buck improvements of interest to advertisers.

Twitter CEO Jack Dorsey said the messaging platform has made strides in becoming profitable and rooting out harassment and abuse. GETTY  AFP  File  David Becker
Twitter says abuse reports have fallen by 16 percent

Analysts, on average, projected US$766.1 million, according to data compiled by Bloomberg. Twitter is also anticipating operating income during the quarter of $5 million to $35 million-well below the $74.9 million operating income Twitter posted during the same period a year ago.

Operating expenses are expected to surge about 20 percent year-on-year in 2019, the company said, due to efforts to improve the health of its platform, exceeding analysts' average estimate of 12 percent. Investors aren't typically so keen on such big bumps in spending.

It's likely that much of Twitter's mDAU growth is coming from Japan, the platform's second largest market.

To counter the poor optics associated with the decline in monthly active users, Twitter also shared its monetizable daily active user count for the first time: 126 million. This time, however, the company has revealed the number of "Monetizable" Daily Active Users, namely those who Twitter can use for targeted advertising. For example, Snapchat obtains its daily active data by monitoring when users open the app, not if they do something that could possibly show them an ad. "Video was more than half of ad revenue for Q4 and for 2018", Twitter said in a statement.

The question going forward remains; is the future for Twitter one of a more focused and valuable user base?

Twitter said it measures its number of daily users differently than other companies because it counts only users who can view ads. That's down slightly from 330 million at the end of 2017. Twitter lists an mDAU figure of 126 million, up from 124 million in Q3. He hinted at new features that would make conversations happen faster and put the ability to follow interests in the forefront of a user's experience on Twitter.

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