You’d think Twitter would be able to milk its status as President Donald Trump’s megaphone. But the company still faces stagnant user growth, has never made a profit and may even report a quarterly revenue decline Wednesday, a first since going public.
Trump’s frequent tweets ricochet well beyond his 28 million Twitter followers. Anything he tweets can serve as fodder for social media, TV news shows and, often, late-night comedy. Analysts say Twitter’s user engagement—how often people respond, retweet or “like,” for instance—likely benefited from “political discourse” in the first quarter.
The problem: The people already on Twitter may well be using it more, but America’s first true “Twitter President” hasn’t inspired others to sign up for Twitter en masse.
Michael Pachter, an analyst with Wedbush Securities, expects “minimal” user growth, consistent with recent quarters. Twitter is expected to release its quarterly financial report on Wednesday morning.
At the end of 2016, Twitter had just 319 million monthly users. By contrast, Facebook had 1.89 billion and Facebook-owned Instagram had 600 million. More users, of course, mean more advertising revenue for the companies, since businesses try to reach as many eyeballs as possible.
Twitter (TWTR) has never turned a profit, and for the first time since going public in 2013, it is expected to report a decline in revenue from the previous year. In the first three months of 2016, the San Francisco-based company posted revenue of nearly $595 billion.
With its slogan “it’s what’s happening,” Twitter has been trying to corner the market for real-time information, to be a place where people can go to find out what’s going on in the world and talk about it with friends and strangers.
And it’s not just politics, but also sports events like the March Madness college basketball tournament or World Cup soccer, not to mention the stuff seemingly made for Twitter, such as the outrage over the dragging of a paying United passenger off a full flight to make room for crew. Video was shared widely on Twitter, as were jokes and anger toward the airline.
As with Facebook (FB), Twitter also has been pushing live video—whether on its main service or through its Periscope app—to keep users interested and engaged. This includes both user-generated content and live-streaming deals. Sports events are especially lucrative.
That’s why the recent loss of an NFL deal to Amazon (”AMZN”)Amazon[/hotlink] appears to have simply outbid Twitter. The Associated Press and other news outlets reported that Amazon’s one-year deal for the 2017 season is worth close to $50 million, about five times what Twitter paid for the right to stream the games last year. Stifel analyst Scott Devitt said that while the NFL deal likely contributed about 1% of Twitter’s 2016 revenue, it “seemed to be an important pillar of Twitter’s Live strategy.”
And in the wake of such setbacks, competition is growing. Besides Facebook and Instagram, Twitter is also vying for advertising revenue from Snap (SNAP), the owner of Snapchat. Snap recently had completed its initial public offering and will report earnings in May.
