Twitter confirmed on Thursday that it has recorded a bigger than expected decline in the number of active monthly users during the third quarter of 2018. This is the second straight quarterly drop this year, and the company thinks that the number will fall again during the final quarter of the year. Despite this, Twitter’s ad revenue was up by 29% surpassing Wall Street’s expectations for the period under review. The social media platform blamed the decline on an ongoing clean-up exercise designed to remove suspicious accounts from the site. The company’s response to new privacy regulations in the European Union has also been a major factor in all this.
The figures released by Twitter show that the monthly active number of users fell by nearly 326 million in the third quarter. Analysts had already predicted the decline but not by this extent. Initial estimates had shown that Twitter could lose at least 331.5 million monthly users in the third quarter. But it looks like the social media platform has performed worse than expected. The trend is expected to continue for the rest of the year.
Twitter has rolled out a number of strategies in the recent months to increase the number of active users. However, the company is facing a massive challenge as it tries to balance its reputation in the market and its growth prospects. Removing fake accounts some of which were involved in the 2016 election meddling appears to be a moral obligation not just for Twitter but for other social media companies as well. But it looks like this plan is really taking a toll on the traffic. The company will need to react very carefully to fix this issue even as it continues with the purge.
Analysts believe that the biggest challenge for Twitter is the declining number of monthly users. Investors look at monthly active data as one of the most reliable indicators of future revenue since most of the social media companies make money through ads. If the number of monthly users is declining, then it’s very likely that in the long term the revenue prospects will also be affected. Growth in the user base has pretty much remained stagnant over the last two years. This is extremely concerning since competitors like Facebook and Google have outperformed Twitter in this regard.
Despite this concern, Twitter has still managed to report an increase in ad revenue. At the moment it seems this has calmed investors but the company still needs to do better in order to expand its user base. The recent figures show that the quarterly ad revenue for the third quarter this year has hit $758 million which is 29% higher than the same time last year.
Twitter has so far removed millions of suspicious accounts from the platform. The company also announced a few months ago that it had banned right-wing conspiracy theorist Alex Jones due to policy violations. Jones had millions of followers and this news wasn’t received well. Twitter’s stocks tumbled by 19% the first time the earnings report came out. The drop continued in the days that followed with the stock now losing nearly 36% of its value.