Not even Donald Trump can turn Twitter’s finances around

9 Feb 2017

Donald Trump following his election as US president. Image: Kobby Dagan/Shutterstock

While it may be the home of many prolific tweeters, including US president Donald Trump, the Q4 earnings for Twitter show it is still not very profitable.

The Twitter Q4 earnings report for 2016 has revealed that despite it being the effective mouthpiece of US president Donald Trump, the social network is failing to attract the growing revenue and user numbers it wants.

According to Bloomberg, the company’s total revenue for the quarter was $717m, which may have just pipped its last earnings report, but was far off analyst estimates of $740m.

Still struggling to attract advertisers

The final three months of 2016 were also quite harmful to Twitter’s revenue, with a reported loss of $167m – considerably more than the $90m it reported the previous year.

Twitter added 2m new users to the platform, bringing its total number of monthly users to 319m.

Reaction from shareholders has been unsurprisingly negative, with its stock falling by 10.2pc to $16.81 a share – although this did increase to $18.72 at the close of the New York Stock Exchange.

The biggest problem Twitter has is advertisers who are still not sure they want to invest considerable amounts of money into a platform that is showing minimal user growth, and is overshadowed by the likes of Facebook, Instagram and Snapchat.

Under the leadership of Jack Dorsey, the company attempted to follow in Facebook’s footsteps, with a focus on generating revenue through video advertising and live video partnerships, such as its one with the NFL.

No single person can change a business

A market analyst for Monness, Crespi, Hardt & Co told Bloomberg that despite its regular appearances in the news, Twitter finds itself in the middle of an “identity crisis”.

“People that use Twitter get it, the world conceptually gets it, but your average potential user doesn’t,” said James Cakmak.

The topic of Trump also came up again during an investor call after the release of the Q4 report, with suggestions that his much-publicised Twitter posts would aid the social network financially.

However, Twitter’s COO Anthony Noto said that no “event or a single person” was enough to fundamentally change a business.

Within the company’s corporate structure, things remain in turmoil. As much as 60pc of its management recently decided to leave their roles, while it also made the decision to shed 9pc of its workforce following poor returns in Q3 2016.

Dorsey said: “While revenue growth continues to lag audience growth, we are applying the same focused approach that drove audience growth to our revenue product portfolio, focusing on our strengths and the real-time nature of our service. This will take time, but we’re moving fast to show results.”

Donald Trump following his election as US president. Image: Kobby Dagan/Shutterstock

Colm Gorey was a senior journalist with Silicon Republic