Doomsayers Predict Twitter Decline After ‘Disappointing’ Q1 Report

Even as its stock prices fall, Twitter has been growing stronger across almost every other metric of success.

Colin Sebastian, a senior analyst for Robert W. Baird & Company, told the New York Times:

\"Based on where some of these stocks were trading, expectations were already very high and were priced for relative perfection. The reaction when companies don’t achieve great results can be fairly severe.

With stock traders and investors demanding perfection from social sites, stock prices are bound to fluctuate. Many commentators note that results from Twitter have been ‘disappointing’ but it’s hard to see which metrics are the cause of this, other than falling short of revenue projections.

Twitter’s revenue grew 97 percent in Q4 of last year, but in Q1 of this year it only grew 74 percent. Ad revenue also grew by 72 percent annually, and full year revenues are still expected to be in excess of $2.2 billion. Hardly the most disappointing numbers that Twitter has seen since its initial public offering.

The ad engagement numbers are hardly cause for disappointment. Overall engagement rose by 32 percent, and cost per ad engagement improved by 30 percent annually. So ads higher value ads are receiving more engagement, and lower costed ads are resulting better returns on investment. User growth is up, and the international active user base is growing.

One Forbes column even notes that there is great growth potential for Twitter ads:

We expect ad engagements to continue to rise at a healthy rate over the coming quarters, owing to the significantly low ad load levels on Twitter. We believe demand will be the main factor that will influence future monetization growth rates, as ad inventory can be increased by a large extent.

The doomsayers are still out in full force. But in the short term, stock price is largely irrelevant. Engagement and active user numbers are growing, and that is what’s important for Twitter in the long term.

Indeed, Twitter’s staff are optimistic about the future. It’s unlikely that missing earnings targets by a mere $4 million will sink Twitter. Facebook didn’t lose 200 million users last year, and Twitter isn’t going away anytime soon.