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Twitter in Trouble? Maybe Not

In an unexpected late breaking news story this week, Twitter saw a sharp decrease in its stock value as both Twitter’ revenue and outlook fell short of industry expectations. Does this mean that the social media giant is in trouble? If so, what does that mean for today’s business owners who rely on the social network to spread word about their products and services?

 

Before you start jumping ship and looking for an alternative, relax and realize that this sort of thing happens every day in every market and every industry all around the world. Just as we all see temporary setbacks in our own business, Twitter is experiencing one now.

 

Twitter executives attribute the shortfall to “lower-than-expected contributions from some of its newer direct-response advertising products.” These are the tools that help advertisers communicate directly with customers in real time on the social media platform.

 

By the Numbers

All of this might seem confusing, so we’ll break it down into numbers for you. Twitter posted a loss of $162 million, or 25 cents per share, in the January-March period. This is in comparison with a loss of $132 million, or 23 cents per share, for the same period last year. Is this something to be concerned about? In reality, it isn’t because just a year earlier, Twitter’s revenue rose 74% to $436 million from $250 million a year earlier. Although that seems impressive, Twitter was forecasted to reach $456 million.

 

Looking ahead, Twitter now expects revenue of $470 million to $485 million for the second quarter. Analysts were looking for $538 million. For the full year, Twitter is predicting $2.17 billion to $2.27 billion, below analysts’ average forecast of $2.37 billion.

 

Losing Their Competitive Edge?

Due to stiff competition from other popular social media platforms, Twitter is having to make some drastic changes to keep up. Twitter’s users were up 18% to 302 million average monthly users while Facebook reported 1.44 billion monthly users just last week.

 

As you can see, even industry giants have their troubles now and then and there can still be a positive outlook. We don’t see Twitter going the way of MySpace any time soon and Wall Street experts predict Twitter will make a rebound with upcoming advertising changes that are currently in the works.