User Growth Slower for Twitter (NYSE:TWTR) Emulating Facebook’s (NASDAQ:FB) History

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By Chris Hillman on October 29, 2014 Social Media

Based on the data analysis, Bloomberg has disclosed that Twitter Inc. (NYSE:TWTR) is slowing down exactly at the same pace as once experienced by Facebook Inc (NASDAQ:FB) when it was at the identical life cycle point. Third quarter report by Twitter disclosed that it has achieved 23 percent monthly growth in its active user base which stands at 284 million. Bloomberg data revealed that exactly six years after Facebook’s debut, it also showed comparable growth trend of 26 percent.

Therefore, investors have shown concerns on the premature deceleration of Twitter’s (NYSE:TWTR) growth and as a result company’s share value declined by just about 10 percent yesterday. There was more than 50 percent drop in the shares of Facebook (NASDAQ:FB) in the months after its market debut in 2012. The reason behind this was that investors concentrated on its capability to generate revenue from mobile device users. Facebook stocks are now standing at double its price of initial public offering (IPO). On the other hand, Twitter is showing encouraging performance. Since listing one year back, Twitter’s shares registered a growth of 68 percent through yesterday.

CRT Capital Group LLC analyst, Neil Doshi said that Facebook (NASDAQ:FB) undoubtedly has a substantial lead of one billion members over Twitter (NYSE:TWTR) but to ensure decent investment returns Twitter does not have to be huge like Facebook. Doshi further differentiated between Twitter and Facebook that former is a social utility tool whereas latter is a network for friends and family gatherings.

According to yesterday’s report, user base of Facebook grew by 14 percent to 1.35 billion users. It maintains seven times higher market value compared to other smaller competitors. At 9:35 a.m today, Facebook’s (NASDAQ:FB) shares declined by 7.2 percent to $74.92 and Twitter’s (NYSE:TWTR) shares fell by less than 1 percent to $43.38. Spokesmen from both Twitter and Facebook did not offer any comments on the issue.

Dick Costolo, Chief Exective Officer of Twitter (NYSE:TWTR) is quite optimistic about the possible expansion of its user base. During an exclusive interview on Bloomberg Television yesterday, Costolo reaffirmed that they have complete conviction that everyone would value the importance of Twitter provided the company’s plans and strategies are properly executed. Therefore, they have kept all kinds of demographics about their users under consideration. As per the CEO, the strategy is to attract more and more users towards Twitter by making it convenient for people to sign up the service and start enjoying various contents suiting their likings. He was also critical about hundreds of millions of web surfers who just don’t log in and hence are not accounted in Twitter’s traffic data.

Martin Pyykkonen, an analyst at Rosenblatt Securities Inc, commented that deceleration in user’s growth is an absolutely normal phenomenon and focus should be on usage than users. Twitter’s (NYSE:TWTR) growth rate for the last three quarters showed a constant decline and remained less than 30 percent, whereas until early 2012 it was doubling quarterly. Since mid 2013, Facebook’s (NASDAQ:FB) growth has never gone above 20 percent.