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Twitter’s User Growth Looks Sluggish

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Twitter’s user growth stagnant

Twitter (TWTR) announced a series of changes to bring in new users and retain existing ones by introducing features such as Moments, promoted tweets, embedded video feeds, and ads for logged-out users.

Despite these attempts, the company’s user growth is stagnating, particularly in the domestic market. International users increased by 4% YoY (year-over-year) to 245 million in the last quarter. Twitter’s MAU (monthly active users) came in at 310 million, up by mere 3% YoY.

Twitter stated that the decline in active users came from both seasonality and its decision to reduce the volume of mail sent to dormant users to bring them back to the service. According to Twitter, the decline in active users was offset by the marketing spending.

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Why Twitter’s user growth is slowing

Intensifying competition from rivals such as Facebook (FB), Instagram, LinkedIn (LNKD), and Snapchat coupled with declining user engagement are the primary reasons behind Twitter’s stagnating user base.

Twitter has the opportunity to somewhat reverse the decline in popularity and increase its user engagement in 2016 as the company struck a big broadcasting deal. Twitter, which was competing against Amazon (AMZN) and Verizon (VZ), won the global rights to stream Thursday Night Football. The NFL announced that it has selected Twitter as its exclusive partner, which is expected to increase the engagement levels on Twitter.

For diversified exposure to select Internet companies in the US, you could invest in the PowerShares NASDAQ Internet Portfolio ETF (PNQI).

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