Watch CBSN Live

Twitter losing money despite Trump's constant tweeting

Companies trumped by tweet?
Companies trumped by tweet? 03:34

NEW YORK - You’d think Twitter (TWTR) would be able to milk its status as President Donald Trump’s megaphone. But the company still faces stagnant user growth and has never made a profit.

The trend continued Wednesday, when the microblogging platform reported a loss for the first quarter of $61.6 million, or 9 cents a share. Earnings, adjusted for one-time gains and costs, were 11 cents per share.

Revenue came in at $548.3 million, down from nearly $595 billion in the year-ago quarter, the first time since Twitter went public in 2013 that it has reported a decline in revenue from the previous year. 

Trump’s frequent tweets ricochet well beyond his 28 million Twitter followers. Anything he tweets can serve as fodder for social media, TV news shows and, often, late-night comedy. Analysts say Twitter’s user engagement - how often people respond, retweet or “like,” for instance - likely benefited from “political discourse” in the first quarter.

The problem: The people already on Twitter may well be using it more, but America’s first true “Twitter President” hasn’t inspired others to sign up for Twitter en masse.

"Unmasking" anti-Trump Twitter acct. 03:49

Michael Pachter, an analyst with Wedbush Securities, expects “minimal” user growth, consistent with recent quarters. 

At the end of 2016, Twitter had 319 million monthly users. By contrast, Facebook had 1.89 billion and Facebook-owned Instagram had 600 million. More users, of course, mean more advertising revenue for the companies, since businesses try to reach as many eyeballs as possible.

With its slogan “it’s what’s happening,” Twitter has been trying to corner the market for real-time information, to be a place where people can go to find out what’s going on in the world and talk about it with friends and strangers.

And it’s not just politics, but also sports events like the March Madness college basketball tournament or World Cup soccer, not to mention the stuff seemingly made for Twitter, such as the outrage over the dragging of a paying United passenger off a full flight to make room for crew. Video was shared widely on Twitter, as were jokes and anger toward the airline.

As with Facebook, Twitter also has been pushing live video - whether on its main service or through its Periscope app - to keep users interested and engaged. This includes both user-generated content and live-streaming deals. Sports events are especially lucrative.

That’s why the recent loss of an NFL deal to Amazon (AMZN) was an especially hard blow to Twitter. Twitter streamed 10 Thursday Night Football games last year and had counted on them to lure in users and keep existing ones entertained. In its quarterly letter to investors in February, the company called the games “the major highlight of the fourth quarter” when it comes to live sports.

Amazon appears to have simply outbid Twitter. The Associated Press and other news outlets reported that Amazon’s one-year deal for the 2017 season is worth close to $50 million, about five times what Twitter paid for the right to stream the games last year. Stifel analyst Scott Devitt said that while the NFL deal likely contributed about 1 percent of Twitter’s 2016 revenue, it “seemed to be an important pillar of Twitter’s Live strategy.”

And in the wake of such setbacks, competition is growing. Besides Facebook and Instagram, Twitter is also vying for advertising revenue from Snap Inc., the owner of Snapchat. Snap recently had completed its initial public offering and will report earnings in May.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.