How Twitter Could Stimulate Growth

Tepid guidance

Twitter (TWTR) recently sounded a warning about its growth. It said its top-line growth rate will continue to trail its subscriber growth rate in 2017. That announcement led the company to issue downbeat guidance for 1Q17.

Twitter is expecting 1Q17 revenue in the range of $428 million–$558 million. But consensus estimate calls for revenue of $628 million in the quarter.

How Twitter Could Stimulate Growth

The chart above shows Twitter’s quarterly revenue trend.

How Twitter can drive growth

One of the reasons Twitter has struggled to grow its subscriber base and revenue is that many people still perceive Twitter’s site as complicated to use, the company’s former CEO Dick Costolo once admitted. The perception that Twitter is difficult to use hurts user engagement and makes it difficult for the company to attract more advertisement spending on its platform.

Simplifying the site for the masses and adding new features and services, such as more video content and live streams, could help attract more subscribers and marketers to the platform, leading to revenue growth.

Dealing with harassment

The other reason Twitter’s revenue and subscriber growth have nearly stagnated is the problem of online trolling on the site. Many users have complained about harassment on Twitter, leading some victims to use the service less, while other victims have shut their accounts and walked away completely.

Trolling costs Twitter user engagement, yet it’s crucial for attracting advertisers to the platform. So ridding the site of trolls could also help reignite top-line growth.

If Twitter delays in getting its act together in terms of attracting more subscribers and encouraging marketers to spend their budgets on its site, the company risks losing more online marketing revenue to Facebook (FB), Microsoft (MSFT), Yelp (YELP), Alphabet’s (GOOGL) Google, and Snap (SNAP).