Can Twitter Keep Growing?

Learn how Twitter could fix its user growth slowdown problem.

Mar 24, 2014 at 8:00PM

Less than one year after its initial public offering, social network company Twitter (NYSE:TWTR) could be showing signals of a slowdown in user base growth. According to eMarketer, the company's user base evolution is settling into a pattern of mature growth. Meanwhile, the company's ad rates continue falling. Twitter recently reported that the annual cost to advertise on its platform had dropped 18% in the most recent quarter.

Long-term growth concerns are quite worrying, as investors tend to see Twitter -- which, unlike competitor Facebook (NASDAQ:FB), does not make money at the moment -- as a pure growth stock. Note that Twitter is valued at nearly $30 billion, $7 billion more than professional social network LinkedIn, which delivered earnings per share of $0.39 in the most recent quarter, beating the Street consensus. To justify its amazing valuation, Twitter needs high growth. Can the company deliver it?


Source: Twitter.

Several challenges ahead
To Quartz contributor Christopher Mims, Twitter's main problem is accessibility. Although it is relatively easy to register, it is hard for a new user to get accustomed to Twitter's code, like @ replies and hashtags. Twitter's secret language probably makes the service more difficult to learn and use than other social networks.

Twitter's poor accessibility may be related with the service's weak retention figures. Note that to date, more than one billion Twitter accounts have been created. Of these accounts, 955 million still exist today, but only 13% of them have tweeted in the last 30 days.

Moreover, according to Twitter analytics company Twopcharts, accounts created in recent years are less active than the ones started by early adopters, suggesting that Twitter has become more difficult to use in the past three years. Only 10.7% of the accounts created in 2012 are tweeting. 

Unlike Facebook, Twitter's a niche network
It's worth noting that, unlike Facebook, Twitter isn't for everybody. Using Twitter involves sharing messages --mostly with unknown people -- no longer than 140 characters each, from time to time. This practice could be very popular among certain segments, such as journalists, teenagers, marketers, or celebrities. However, there are plenty of people who are just not interested -- and probably will never be -- in writing tweets.

On the other hand, Facebook is more general. It could be seen as a platform for sharing messages. It could also be used to keep in contact with relatives and friends. It could even be used as a news source, a place to upload pictures, or as a chat room. In this sense, C-net's contributor Dan Farber has made a great comparison between both services: Facebook is like a pulsing digital city, while Twitter is more like a town square, where people -- who might also live in Facebook -- congregate from time to time to share thoughts. 

From now on
Despite probably being a niche network, Twitter could still surprise investors in several ways. First, as a niche network, Twitter may not be for everybody, but those who are really into Twitter are not going to replace the service for other alternatives. Some of Twitter's fans may actually be willing to pay in order to get a premium membership, which could allow the company to improve monetization. A stronger focus on earnings could help the company offset worries related to future growth.

To increase growth, the company could use its extreme popularity among certain groups to successfully release stand-alone apps. This strategy has been used by Facebook -- which launched its Messenger stand-alone app in 2011 -- to strengthen its mobile presence. Now Facebook is not only the world's largest social network, but also the owner of a diversified portfolio of high-traffic apps, such as Instagram, Facebook Messenger, and Whatsapp. Finally, Twitter could also be improved by installing a better-designed service. However, whenever adding a new feature or changing the design of an app, companies always risk disappointing some fans. 

Final Foolish takeaway
Eight years after its release, it appears Twitter has a growth problem, which could be caused by the service's limited accessibility. However, the company can still find ways to improve both growth and earnings figures, from installing a premium service to releasing stand-alone apps.

Investing in wearable computing
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.

Adrian Campos has no position in any stocks mentioned. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers