The knocks on Twitter (NYSE:TWTR) are certainly nothing new. Tweet fans and foes alike have heard the same, negative news regarding Twitter's slow monthly active user (MAU) growth and poor engagement levels for much of the past year -- if not longer. For a while at least, consistent top line revenue growth seemed to placate Twitter fans, overshadowing its MAU concerns. Those days are over.
Down nearly 30% year to date, Twitter shareholders are paying the price for its sluggish MAU "situation." And it's not likely shareholders will get a reprieve when Twitter shares its Q1 earnings news on April 26. To add insult to injury, according to recent data from research firm comScore, it appears Twitter's user engagement problem is actually getting worse.
The envelope please
It should be noted that comScore's data on Twitter, Facebook (NASDAQ:FB), and several other social media sites is not all-encompassing, but rather specific to mobile users in the U.S. That said, as the largest digital advertising market on the planet and one of the most connected, the states offer a fair representation of social media usage.
As for mobile usage, about 80% of Twitter's MAUs are of the mobile variety, and an even higher percentage -- approximately 90% -- of Facebook's 1.59 billion monthly users access the site with a mobile device. Multiple online sites, including Twitter, Facebook, Alphabet's wildly popular YouTube, Instagram, among others, were included in the engagement study.
Of the six sites researched, mobile users in the U.S. accessed Twitter just 2.7 minutes each day. To put that into perspective, Pinterest averaged four minutes and Snapchat boasted 8.5 minutes of daily usage. Not surprisingly, Facebook leads the way with slightly over 30 minutes of daily mobile usage from U.S. "friends," followed by Snapchat, YouTube's eight minutes, and just over seven minutes of Instagram visits.
Unfortunately, Twitter's poor engagement levels compared to others in the social media space isn't the worst aspect of comScore's research. The first quarter of 2016 marked the eighth straight period of declining engagement levels from Twitter users, despite efforts to address the problem by adding video-sharing capabilities, group messaging, and reordering its timeline based on relevance, to name but a few.
It's all about timing
As Twitter limps toward its 2016 Q1 earnings announcement, it also shared the ill-timed news that its much-heralded CFO Anthony Noto -- who replaced Mike Gupta in the summer of 2014 -- has earned himself a fairly substantial raise. Noto's new pay plan includes an additional $5.55 million (at today's share price levels) in a combination of performance-based stock and restricted stock which will begin vesting in May of this year, and become fully vested in early 2019.
The combination of Noto's stock awards includes 22,500 shares of stock that are performance based and will, or won't depending on results, become vested after Twitter examines its performance in Q1 of next year. The balance of Noto's new payday -- 318,750 shares -- are of the restricted variety and require he remains with Twitter as the stock becomes vested in annual increments.
There's nothing wrong with a senior executive of a publicly traded company getting fairly compensated, of course. But considering Twitter shareholders are sitting on a nearly 70% drop in value in the past year, with little to no prospects of getting things turned around, significantly boosting anyone's pay now is a bit... awkward.
Fair or not, Twitter's poor MAU growth and engagement levels are often compared to Facebook, which makes the tweet master's woes that much more painful. Facebook grew its user base by another 40 million last quarter, and over 1 billion of its MAUs access the site every, single day. Twitter actually lost 2 million MAUs in Q4 and as comScore's data makes clear, it certainly hasn't fixed its engagement problems. Twitter is going from bad to worse, and unless it pulls some miracle of its hat when earnings are announced later this month, that trend will continue.