Tech

Twitter Gets Downgraded And Could Decrease Its Advertising Revenues

By Luis Fran , Jan 18, 2017 10:07 PM EST
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Twitter’s ad revenue grew in the second quarter, but the social media company is still trying to get back on track. On Tuesday, it was announced that Twitter's advertising revenues increased 18 percent to $535 million while net revenues rose 20 percent to $602 million. (Photo : Wochit Business/YouTube)

Social media network Twitter is facing the worst moment in its history since financial problems and a concerning decrease of users got to the point in which the board members wants to sell the company, while at the same time has taken some crucial measures in order to increase the platform popularity. Although there was hope for seeing an improvement, new information reveals that the situation actually got worse, given the fact that it was downgraded to neutral at UBS, which not only cited muted growth among the monthly average users but also lowered advertising revenue.

Twitter´s Numbers Still In A Delicate Position

According to Investors, UBS analyst Eric Sheridan also lowered his price target on the social network stock from 22 to 18, which clearly represent a major problem for Twitter, considering that its stock lost 1.7 percent to close at 16.96 on the stock market yesterday. Given this situation, Sheridan explained that Twitter decommissioned a lot of direct-response advertising products and service over the last months, which is something that could affect the platform´s ad budget growth.

However, the worst news for Twitter is that the Wall Street consensus looks for revenue of $740.1 million, which is down to 4 percent year over year, which probably represents its slowest quarterly growth ever, just a few days before Twitter report its fourth-quarter earnings before the market´s aperture on February 9. In fact, the earnings per share minus the items can actually fall from 25 percent to just 12 cents, which is the third quarter in a row of earnings decrease year over year.

Twitter Will Have Huge Problems In Its Intention Of Attract Advertisers

As reported by CNBC, Sheridan also suggested that Twitter´s ad revenue will be pressured and its growth will be below the industry levels because of the lackluster advertiser demand, challenged ad execution and executive turnovers. In fact, he strongly believes that these operating challenges will have a collateral damage as the user growth´s falter, which will impact Twitter´s appeal to advertisers.

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