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Tweeter–in–chief fails to boost sinking social media profits

Twitter on the New York Stock Exchange – shares have tanked with lowered earnings guidance.

Twitter on the New York Stock Exchange – shares have tanked with lowered earnings guidance. Photo: AP/Richard Drew, file

The world’s most talked about man is its biggest fan … but Twitter is failing to turn headlines into cash.

Despite massive (HUGE!) support from US President Donald Trump, Twitter reported quarterly revenue that missed Wall Street’s expectations and issued guidance that fell far short of estimates.

Twitter posted fourth-quarter earnings of 16 cents per share on revenue of $US717 million ($A940m).

Its profit forecasts are sending investors scattering.

The social media website says it expects between $US75 million ($A98 million) and $US95 million ($A124 million) in adjusted earnings before interest, taxes, depreciation and amortisation, a far cry from the $US191 million Wall Street had been expecting, according to a survey of industry analysts by FactSet.

Company shares plunged 11 per cent before the opening bell Thursday
Twitter topped analyst expectations with adjusted earnings per share of 16 US cents in the fourth quarter, 4 US cents better than expected, but that was overshadowed by its outlook.

Shares of Twitter slumped $US1.96 to $US16.76.

Twitter CEO Jack Dorsey, in a Q4 statement, made reference to the platform’s sudden upswing as a way of mobilising people, largely thanks to Mr Trump’s heavy and unorthodox use of his account.

“The whole world is watching Twitter,” he said.

“While we may not be currently meeting everyone’s growth expectations, there is one thing that continues to grow and outpace our peers: Twitter’s influence and impact.

“You don’t go a day without hearing about Twitter. How it was used as the fastest way to send a message to the whole world in an instant. How it carried some of the most important commentary and conversations. How it mobilized people into action. That’s powerful, valuable, fundamental, and the reason we’re all here fighting so hard for this service and company we love.

https://twitter.com/jxnmarc/status/829746779948199936

“It’s been hard, it will continue to be hard, and it’s all worth it. Twitter forever changed the way the world communicates, and we will do it again.”

Mr Dorsey said 2016 saw a reset for Twitter where it focused on its strengths.

The Trump effect

One top analyst however has provide an explanation for why Twitter has failed to capitalise on the president’s penchant for the platform.

Richard Kramer from Arete Research told CNBC’s Worldwide Exchange that advertisers may be wary of being associated with the constant tweeter – and of the backlash if they upset him.

“I think whatever your political views, it’s clear that Trump is extremely divisive, and this isn’t really a positive for advertisers,” Mr Kramer said.

https://twitter.com/chrissyteigen/status/829467204903018496

He said his firm still has a negative view on Twitter because although monthly average users are growing, the platform is becoming riskier for advertising, which is a main profit driver for competitors like Facebook and Alphabet’s Google.

“This is not a platform that advertisers will want to, in advance, associate themselves with,” Kramer said, noting that ad campaigns are put together long before they run.

“Can you imagine Nordstrom running a campaign on Twitter, pre-buying it or planning it … and finding out that the president is slating them on the same platform?” the analyst continued.

That’s exactly what he did yesterday when Nordstrom dropped First Daughter Ivanka Trump’s clothing and jewellery line.

– with AAP

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