I love Twitter, it has been and remains my favourite social network for connecting with people and meeting new people. However, in case you haven’t noticed yet, Twitter has been in trouble financially for some time and there are no signs that is going to stop any time soon.
The platform has more than 300 million active users, baby numbers compared to the number of active users that competitors such as Facebook, Instagram and now Snapchat are racking up. Over the past year a wave of new features have arrived on the platform but none of them have cause a surge in the amount of people signing up to and using Twitter.
In a shareholder document for the year ending 2015, the company said it had a deficit of more than $2.09 billion since it was founded in 2006 due to “significant operating losses.” Despite revenue growing from $28.3 million in 2010 to $2.22 billion in 2015, it has still failed to become profitable.
In 2015 alone, Twitter lost $520 million. The company also accrued more than $400 million in loses prior to its IPO.
Twitter blames the issues on a “decline in the growth rate of user base.” They also say that future revenue growth will depend significantly on the company’s ability to attract new users and to increase overall engagement.
The problems remain the same as they have been for the past number of years, new users and struggling to get to grips with the social network. People find the service confusing, new features have not yet been enough to reverse that problem as of yet.
Since Twitter was founded it has never made a profit. Revenue has grown, but due to the sheer scale of company growth it means that the operating costs have significantly increased.
Under the “risks” section of the document Twitter admits that new users might be confused by the product: “Despite our efforts to reduce barriers to consumption, people who are not out users may not understand the value of our products and services and new users may initially find our product confusing,”
It is unclear what Jack Dorsey may have planned long term to try and help Twitter’s fortune however at the moment they are walking a thin line of trying to introduce new features which will attract a larger audience and at the same time not alienate a large part of the loyal user base. Meanwhile Wall Street still lacks confidence in Twitter and the stock price remains low.