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Twitter faces bid talk after slowest quarterly growth since float - broker

Last updated: 11:16 27 Jul 2016 EDT, First published: 06:16 27 Jul 2016 EDT

Twitter symbol on New York Stock Exchange
Twitter said average monthly active user numbers rose to 313mln in the second quarter

Twitter (NYSE:TWTR) reported its slowest growth in quarterly revenue since it listed on the market in 2013, sparking talk that it could become a takeover target.

Revenue rose about a fifth to $602mln and it forecast current quarter revenue of US$590mln-US$610mln, below the average analyst estimate of US$678.18mln.

Broker Wedbush said: "We think its service is too complicated and difficult to use for the average Internet user despite multiple changes.

“We attribute recent share price appreciation to speculation that Twitter may be acquired, but in our view, there is no clear-cut potential buyer.”

The social media site said average monthly active user numbers increased to 313 million in the second quarter from 310 million in the first quarter.

Net losses narrowed to US$107.2mln, or 15 cents per share, in the second quarter to June 30, from US$136.7mln, or 21 cents per share, a year earlier.

Revenue rose about a fifth to $602mln.

It also forecast current quarter revenue of US$590mln-US$610mln, below the average analyst estimate of US$678.18mln.

Chief executive Jack Dorsey said: "We've made a lot of progress on our priorities this quarter.

"We are confident in our product roadmap, and we are seeing the direct benefit of our recent product changes in increased engagement and usage.

“We remain focused on improving our service to make it fast, simple and easy to use, like the ability to watch live-streaming video events unfold and the commentary around them."

Shares in Twitter fell US$2.38, or 12.87%, to US$16.07 following the update.

Wedbush said: “Twitter remains the place to go for live broadcast, but management appears complacent about the status quo and unfocused on the lack of user growth.

“Until Twitter is focused on attracting new users, driving increased use by its existing users, and demonstrating its value proposition to people who don't use the service, we expect it to grow very slowly."

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