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Why Is Twitter’s Stock Price Declining?

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A tough road for Twitter

Social media platform Twitter (TWTR) is probably going through its toughest phase since its launch date of July 15, 2006. Twitter’s issues include a volatile stock price; stagnating user growth, especially in the US (SPY); the departure of key executives; a dimming outlook; and core product issues. Moreover, the company is not yet profitable.

Twitter ranks among the top players in the social media landscape, which includes Facebook (FB) and LinkedIn (LNKD). Investors have had high hopes for the company for close to ten years. Twitter was one of the most sought-after IPOs as the stock popped to $44.90 per share on its first trading day, after the IPO was priced at $26 per share.

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Slowing active user growth

Twitter’s shares shot up to $73.31 on December 26, 2013. However, Twitter’s stock price has declined continuously in the wake of stalled user growth.

Twitter struggled with sluggish growth in the number of active users, which led to a fall in its popularity and a loss of market appeal. This is crucial, as a loss in appeal could reduce Twitter’s overall market share in the advertising space. Advertising remains the major source of revenue and Twitter already faces stiff competition from Google (GOOG) and Facebook in this market.

About Twitter

Founded in 2006, Twitter is a social media platform that allows its users to post their thoughts in 140 characters or less, known as tweets. Twitter also allows users to broadcast and live-stream videos through its Vine and Periscope mobile applications.

The company’s promoted products—including promoted tweets, accounts, and trends—help advertisers to promote their brands, products, and services.

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