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Twitter share drop: It may be evolving, but not fast enough and nothing like Facebook

Analysts say investors want to see more rapid change at the social network.

Twitter floated on the NYSE last year.
Twitter floated on the NYSE last year.
Image: AP/Press Association Images

TWITTER SAW ITS shares hammered yesterday after reporting quarterly results that largely met expectations but failed to allay concerns about sluggish growth of the messaging platform.

The San Francisco-based firm service posted a net loss of $175.5 million (€138 million) on $361.3 million in revenue in the three months that ended on 30 September.

Meanwhile, the number of monthly users grew 23% from a year earlier to 284 million, matching expectations of analysts.

“We had another very strong financial quarter,” Twitter chief executive Dick Costolo said in a release.

“I’m confident in our ability to build the largest daily audience in the world, over time, by strengthening the core, reducing barriers to consumption and building new apps and services.”

Twitter shares fell more than 10% in after-market trad with investors evidently hoping to hear the ranks of users were growing faster.

“Their user growth is mildly encouraging, but I want to see better,” said Forrester Research analyst Nate Elliott.

Users is their key metric; they need to get people using the site every day.

Lagging Facebook

The analyst lamented that the Twitter service has changed little since it launched in 2006, while social network Facebook has thrived by perpetually innovating.

“Facebook is constantly giving people new reasons to come back to the site, Twitter needs to do more of that,” Elliott said.

Twitter earlier this month said it would start reconfiguring users’ timelines with “relevant” messages from people they don’t follow.

Based on a positive response from its tests, the service is inching toward the Facebook model of using software to “curate” what users see based on their interests or activities.

Twitter said the plan, which has drawn resistance from some users, remained a “timeline experiment” and might not make it to 100% of users.

The company said testing showed that many people enjoy seeing tweets from accounts they don’t follow, provided the messages are deemed worthwhile based on “signals” such as popularity, level of interaction, and how much interest is shown by account’s one does follow.

Wall Street Twitter IPO Twitter CEO Dick Costolo. Source: AP/Press Association Images

The notion of curating Twitter timelines that have long been loved for real-time blasts of information is seen as anathema by some fans of the service.

Facebook continually refines its algorithm for determining which posts should be given priority in timelines presented at the leading social network.

“Twitter will always be a real-time network,” Twitter chief financial officer Anthony Noto promised in an earnings call with analysts.

He left open the door for Twitter to tinker with timelines in the spirit of surfacing “tweets” users may have missed earlier or which may be strongly relevent to their interests.

Twitter will host an analysts day in November to lay out its strategy for taking advantage of opportunity it sees ahead for the business, according to Costolo.

“I feel good about the strategy we have in place,” Costolo said during the earnings call.

“It is critical that we increase the pace of execution,” he added, saying that innovations need to move faster from theory to reality at the service.

Twitter last week set out to weave itself into mobile applications with a free “Fabric” platform to help developers build better programs and make more money.

Fabric consists of software tools to tackle challenges such as stability and distribution of applications as well as streamlining user log ins and placing ads.

The move could build Twitter functions directly into new mobile apps, which could greatly expand the reach of the messaging platform.

© – AFP 2014

Read: Is Twitter moving to a Facebook-style feed? >

Read: No, it’s not just you, Twitter is down >

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