TWITTER WOES - ZERO PROFIT

Ten years of inception, more than 300 million active users, growing revenue but Profits- ZERO. And losses stand at a staggering figure of more than $2.09 billion.  In its shareholder document ‘Annual 10-k’ for 2015, which provides a comprehensive overview of the company’s business, the company announced its losses blaming it mainly on operating losses. Revenues generated are not able to match the increasing operating costs.

Twitter had already lost more than $400 million before going public in 2013 and the company lost $520 million in 2015 alone. In the document, company mentioned that, “Although our company has grown rapidly, growing from $28.3 million in 2010 to $2.22 billion in 2015, we expect that our revenue growth rate will be slow in future due to variety of factors, including the decline in the growth rate of our user base”.

More than the profit loss figure, what is worrisome is the future prospects of the company. The company’s stocks have still not been able to recover from its year beginning fall to $20 per share from a high figure of $70.

Twitter, well aware of its woes believes that their future revenue growth will depend on their knack to draw new users, as the key problem to their business is a false perception that Twitter is valuable only to devoted users or influential people. Twitter plans to increase its user base and ad engagement, compete effectively, increase brand awareness, maximize sales effort, and develop new products and services to expand globally.

Though the deficit figure is high, it is still manageable as the scale on which Twitter operates is also high. Twitter, which was founded in 2006, importantly mentioned in the document, that “you should not rely on the revenue growth of any prior quarterly or annual period as an induction of our future performance”. The company is expecting their costs to increase in the future period. Giving a peep into their next plan of action, the document also noted company’s renewed emphasis to “demonstrate our value proposition to a larger audience” through product improvements this year.