By Tom Huddleston Jr.
July 27, 2017

Twitter’s brief honeymoon with investors hit a big bump on Thursday morning, when the company reported another disappointing round of quarterly user growth numbers.

For the second quarter of 2017, Twitter reported 328 million average monthly active users, which came in just below the 328.8 million monthly users that Wall Street had been expecting. Twitter’s monthly user numbers are up 5% from the same period last year, but they haven’t budged from this year’s first quarter. The disappointing news send Twitter’s stock plummeting by more than 13% during Thursday afternoon trading, as investors showed their concern that the company continues to trail behind social media rivals like Facebook and Snapchat in the battle for users.

The company also claimed that its number daily active users did grow by 12% in the second quarter, which would be up from a 5% uptick in the same quarter last year, though Twitter did not provide specific statistics to show the actual number of daily users.

The disappointing earnings report comes after Twitter managed to post a strong stretch that saw the social media company’s stock rise more than 40% going back to April, when Twitter surprised Wall Street with its largest quarterly increase in monthly users (9 million) since 2015. While some people attributed that early-2017 user growth to the election of Twitter-friendly President Donald Trump, the company said it was due to changes made to Twitter users’ timeline displays that highlight posts they might have missed.

On Thursday, the company also reported a second-quarter net loss of $116.5 million, nearly 9% more than the same period last year, as Twitter’s advertising revenue dropped by 8%, to $489 million. Those ad sales numbers actually beat analysts’ estimates ($458.1 million), but coming a day after Facebook reported quarterly ad revenue of $9.2 billion, Twitter’s own results serve as a yet another reminder that advertiser would much rather spend their marketing dollars on social platforms with greater reach.

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In an earnings call with investors and analysts after Twitter reported its results, CEO Jack Dorsey expressed “confidence that our product improvements will continue to contribute to meaningful increases in daily active usage.” Twitter has been investing heavily in live video in recent months, including cutting deals to partner with companies like Bloomberg Media, BuzzFeed, and Viacom, as well as several major sports leagues, to stream hundreds of hours of live content via the social media service. However, Twitter suffered a setback in its video strategy earlier this year, when it lost out on a rights deal to live stream NFL games that went instead to Amazon.

Twitter has also been working to improve users’ experience on its service by trying to answer calls to curb online harassment and abuse. Last week, Twitter released internal data in which the company claimed it is “taking action” against 10 times more abusive accounts than it was at the same time last year, including suspending “thousands more abusive accounts” each day. “People are reporting significantly less abuse on Twitter today than they were six months ago,” Dorsey said on the earnings call.

The company also tried to spur user growth by introducing a new product in April, Twitter Lite, that uses less data than the full platform and is only available on a mobile web browser. Twitter Lite is meant to promote user growth in remote parts of the world where Internet service can be spotty, and where the company has struggled to add new users as quickly as it would like. On the earnings call, Dorsey called the early results from Twitter Lite “really positive,” but he declined to offer up any specific statistics that might quantify that initial success.

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