Twitter Inc (NYSE: TWTR) showed signs the struggling company may finally be getting on track in 2017, but not everyone is convinced the Twitter will find its way. As the company’s user growth continues to slow, monetizing that user base could become increasingly difficult.
According to Morningstar analyst Ali Mogharabi, Twitter has a long way to go to prove it can hang with social media rivals Facebook ( FB) and Snap ( SNAP).
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“While Twitter remains one of the main real-time online content distribution platforms, the firm’s user base and its growth lag other social networks such as Facebook (including Instagram) and Snap’s Snapchat,” Mogharabi says.
According to RBC Capital’s recent social media usage survey, Twitter seems to be losing the social media usage battle as well. RBC analyst Mark Mahaney says Twitter’s recent usage trends among all age groups are “weak” compared to its competitors.
“Twitter has seen notable selection slippage across all under-51 cohorts, while both Instagram and Snapchat have seen broad improvements,” Mahaney says.
Forty-two percent of social media users surveyed reported having a Twitter account, less than half of the 91 percent who reported having a Facebook account. To make matters worse, RBC found user satisfaction levels among Twitter users significantly lag those of Facebook and Snapchat users.
“On the whole, Twitter had some of the least positive takeaways from our survey,” Mahaney says.
In the high-growth social media market, Twitter has consistently failed to keep pace with market leaders. In the most recent quarter, Twitter reported a 4 percent year-over-year decline in revenue and once again missed consensus estimates for user growth. Despite a base of more than 300 million users, Twitter has not been able to translate those users into profits the same way Facebook has.
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Mogharabi says there is simply too much uncertainty and inconsistency in Twitter’s numbers to be optimistic at this point.
“While we believe Twitter can expand its user base and attract more ad dollars, the company has not yet demonstrated this ability consistently,” Mogharabi says.
RBC has an “underperform” rating and $18 price target for Twitter. Morningstar rates TWTR stock as “overvalued” and estimates fair value at $17 per share.
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Twitter Inc (TWTR) Is Running Out of Chances originally appeared on usnews.com
