Twitter Inc. has been making an effort to make its platform more engaging for users and add more customers to the platform however analysts at Morgan Stanley feel that the company will not be able to achieve much of that in the near future.
Twitter Inc. just can’t catch a breath. Due to projected slow user growth, revenue and earnings analysts at Morgan Stanley came down hard on the micro-blogging website as they lowered their forecast for Twitter stock.
In a note to investors, Brian Nowak, an analyst at Morgan Stanley stated that Twitter has had some trouble in keeping its current users engaged and along with that the social media website’s user trend remains troubling as well. Due to this reason, Morgan Stanley has slashed its twelve year target price to $16 from an initial one-year price target of $18. Furthermore, the financial services and research firm also reduced its projects for fiscal year 2017 by 13% to $769 million. Along with that it also reduced the revenue forecast of the micro-blogging website to $3.23 billion which indicates a slash of 6%.
The social media network has been struggling to keep users engaged on the website and has failed to increase the number of users on Twitter; apart from its user-base of politicians, celebrities and journalists, the social media site has found it difficult to attract mainstream social media users onto the website. In an attempt to attract these users, Twitter signed a deal with U.S. National Football League to stream its games on the platform so that it can drive more videos onto its platform from the NFL.
Morgan Stanley has maintained its Underweight rating on the stock of the micro-blogging platform. Furthermore the firm mentioned that the average time spent by a U.S mobile user on Twitter fell by almost 10% in the first quarter of 2016 in comparison to the same quarter in the previous year. However, in comparison to the previous year’s same quarter the new mobile app downloads were the same.
The note also suggested that any new users that might be added on the platform will be solely due to the deal that the social media network signed with NFL, the U.S. Presidential Elections as well as the Olympic Games. The analyst wrote that at this point fewer users are seen on the platform and even those that are on the platform are seen using the service for lesser time.
The analysts at the research firm are expecting that usually in the first quarter of the year the active user growth is reported to be fair however this time they are predicting that the social media site will not be able to report strong numbers when the company releases its earnings results on April 26.
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