Even Trump’s Spectacular Tweets Don’t Help
Twitter, which has been laying off people and subletting large sections of its office space in San Francisco to other companies, reported today that neither the election campaign – despite the closely followed tweet storms of presidential contenders Donald Trump, Bernie Sanders, and to a lesser extent Hilary Clinton and other candidates – nor the even more closely followed tweets of President Elect Trump produced visible results on its fourth-quarter revenues and earnings. earth
Twitter now has reported net losses – as accounted for under the required Generally Accepted Accounting Principles (GAAP) – every year of its existence. Pretty soon it adds up: Over the past four years, those losses amounted to $2.2 billion.
One of its own key metrics, monthly average users (MAU), inched up 4% globally to 319 million. But in the US, where election and post-election brouhaha should have boosted the metric, it remained stubbornly flat sequentially, at 67 million and was up only 3% year-over-year.
Which was bitterly disappointing for some analysts who’d expected this election brouhaha, and particularly Trump’s spectacular tweets that reverberate around the world, to perform some miracles, if not for democracy, then at least for Twitter Inc.
In the same vein, and despite the election brouhaha on Twitter, US revenues in Q4, at $440 million, fell 5% year-over-year.
There was some revenue growth, but outside the US: international revenues rose 12% to $277 million. So total revenue in Q4 inched up less than 1% to $717 million. Alas, advertising revenues, Twitter’s primary source of revenues, fell 0.4% to $638 million.
On an annual basis, year-over-year revenue growth has plunged. And given Q4 revenue “growth” of less than 1%, growth may well disappear entirely or even turn negative in the near future (more on that in a moment when Twitter says that it won’t give a revenue outlook).
Total annual revenue growth:
- 2012: 198%
- 2013: 109.8% (Twitter’s IPO took place in November that year)
- 2014: 111.0%
- 2015: 58.1%
- 2016: 14.0%
Twitter is fond of using its own accounting methods because GAAP is just too brutal. So portraying its financial results under its own accounting methods, Twitter shows a “non-GAAP income” in Q4 of $119 million or $0.16 a share, and a full-year “non-GAAP income” of $405 million.
It uses a lot of stock-based compensation to pay its employees, which dilutes shareholders and comes at shareholder expense, who by golly have been beaten up enough. But then Twitter accounting says that paying employees this way isn’t actually an expense and so it ignores it along with some other inconvenient expenses.
Based on its own home-made accounting method, Twitter produced annual “non-GAAP” profits of $750 million over the four years.
“Non-GAAP” earnings:
- 2013: -$34 million
- 2014: +$101 million
- 2015: +277 million
- 2016: +406 million
But based on GAAP, it has lost money – lots of money – every year. In Q4 it had a net loss of $167 million, or $0.23 a share. Here are the annual net losses over the past four years, for a combined total of $2.2 billion.
GAAP earnings, um, losses:
- 2013: -$645 million
- 2014: -$578 million
- 2015: -$521 million
- 2016: -$457 million ($0.65 a share)
In this way, Twitter’s non-GAAP accounting methods have inflated its four-year profits by nearly $3 billion. Kudos!
What does Twitter have to say about its glorious performance? Here’s co-founder and part-time CEO Jack Dorsey (among his other gigs are CEO and Chairman of Square): “2016 was a transformative year as we reset and focused on why people use Twitter.”
Which is precisely the biggest problem: not enough people can figure out why on earth they should use Twitter.
Perhaps because it sees big trouble in its advertising revenues, Twitter refused to give revenue guidance for 2017. It’s better not to predict a revenue downturn outright. But it gave some hints:
Advertising revenue growth may be further impacted by escalating competition for digital ad spending and Twitter’s re-evaluation of its revenue product feature portfolio, which could result in the de-emphasis of certain product features.
Twitter shares (TWTR) plunged 10.7% to $16.72 at the moment. They’ve been in this range for over a year, after having spiked to $73 within less than two months of its IPO in November 2013. Plunges have become a regular occurrence with Twitter shares, and today’s is far from the largest. But after each plunge, folks think that things will get better soon, that Trump or some other miracle will come along and single-handedly pull Twitter out of its funk, and they bid up the shares, only to see them get hammered down again. I expect this time-honored principle to continue.
But there opportunities even in dire times. Here’s what the experts of the “restructuring industry” see. Read… The Growth Industry in 2017? Debt Restructuring & Bankruptcy!
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Seems like foolish nonsense to me, all of this twit sh11t .
I use email, and the boss texts to her friends, and family peeps.
Even among my kid’s millennial friends, I know of not one twitter.
Foolish nonsense, even with President Trump as its champion.
SnowieGeorgie
There is one recent bright spot for Twitter. After some large companies awoke to find their share price down 5 % because the Twitter- in- Chief said something nasty about them at 3 AM. a junior exec has been assigned to Twit…Twitter watch.
Maybe their accountants are creative enough to monetize this.
Ahhh, that is why they have not yet banned user Trump, I guess. They can’t afford to. “So Sad” :-)
why woudl facebook not have the same ad revenue problem.
How many FB uses even look at adds? Let alone buy?
I’ve long thought that myself. I go out of my way to NOT look at ads on the Internets (this site excepted, of course, ahem), but companies pay billions of dollars to advertise across millions of sites.
But, I assume, they look at the numbers and determine it to be a profitable effort. So, there must be lots of people who see those ads, click and buy all day long. Hoarders maybe.
FB, like many other ad providers, offers two kinds of products to would-be advertisers: CPM and CPC.
In the former advertisers pay a fee each time their advertisements are displayed (the correct marketing term is “impression”) a thousand times.
In the latter advertisers pay only each time somebody actually clicks on their ad.
Costs in both cases vary wildly, as FB (again, like many other providers) has a bidding structure for advertisers, the logic (not incorrect) being we are all competing for somebody’s time. FB will also advise you bid increments (of course) when things are slow, which can be as low as 40 cents/click and as massive as $7/click. Generally speaking coughing up what FB “suggests” results in an increase in clicks but…
FB is universally reckoned to be the absolute worse when it comes at so called clickthroughs, meaning the ratio between impressions and effective clicks is rotten: 0.01% is the norm. Of course marketing experts will tell you that’s nothing compared to exposure. They may be right, but I’ve heard by colleagues, contractors, customers and even competitors the phrase “FaceBook’s highly questionable commercial practices” one time too many.
Twitter… Twitter has a problem which, given the tone of the article, is deeply ironic: it’s second only to LinkedIn when it comes to the extravagant fees it charges. Yes, advertising on Twitter is expensive but, possibly to different demographics from FB, clickthrough rates are through the roof: I’ve seen numbers as high as 0.8%. However…
Revenues are nothing to write home about, just like they’ve always been. In fact I’d like to know how much that increase is due to new bidders and how much due to the big institutional investors simply paying the new “suggested” and higher fees.
I wonder if Facebook understands how many of its page views are police investigators and internet voyeurs. Indian men in particular seem to prowl Facebook to oogle American females photos. I put a few pictures of my girlfriend on my Timeline and out of nowhere I was getting ‘likes’ from guys in India!
It begs the question: why put a picture of your girlfriend on FB?
I’ve deativated my Facebook account long ago as time wasting and I didn’t have a life. Now I have my life back and im free without all the fb BS
I’ve never held an account in Facebook or Twitter to begin with.
Everything you put out there becomes permanent; and potential employers/business clients with half a brain will check everything you put there. Why give them an excuse to either not hire you or do business with you?
Why should you also invite people to troll you and give you grief?
Plainly put: I don’t swim in dirty water.
While I genuinely appreciate Trump’s ability to get his thinking out without it first being filtered and re-interpreted by the media or others, I can’t imagine why anyone would be interested in my latest, greatest thought.
In one respect Twitter saved the world since Hillary would have put the government up for sale while any of the stock Republicans would have let the neocons, regime changers, and money printing globalists do their thing without interference. To that end, the world should remain extremely grateful and support Trump’s noise, not fight it. You don’t have to agree with it.
In Chicago, you need to be connected to make any real money unless you have exceptional and rare talent. Twitter allows Trump to get his message out without needing to be connected – which infuriates and threatens the status quo. This is the precise reason why he is hated so wildly by so many in the ‘Establishment’ and those who don’t know any better. He’s not following the script and their protected ‘thing’ is at risk.
But, I still can’t imagine why Twitter would care about my opinions or why I could get a follower, BTW, what’s a Twitter follower?
A Twit?
Who knew that Big Brother would represent itself in the form of only 140 characters by the president? It’s worrisome.
Trump’s twitter feed reminds me of Truman’s “The Buck Stops Here.” I might say I would consider opening a Twitter account just for his Tweets, but they are reported on everyday so no need.
You don’t need to set up a Twitter account to follow Trump’s Twitter feed. You can read his Twitter feed directly in your browser. Just use these links and bookmark them (but without account, you cannot reply to the tweets or retweet them):
https://twitter.com/realDonaldTrump
https://twitter.com/potus
DH, respectfully, your comment makes no sense. Big Brother controls, not comments. Hillary was Big Brother, only she gave you a full playground you were never expected to leave without paying first. The stock Republicans gave control to their donors and you were expected to go along and do more than tweet if you disagreed. Why do Trump’s unfiltered comments worry you? He’s Big Brother’s arch enemy and someone who has little respect for the needs of the Establishment.
I fear President Trump is Big Brother from another mother, judging the backgrounds of the majority of his Cabinet picks, and his incredible thin-skinnedness in the face of any kid of criticism. Public threats to ‘destroy’ the careers of those who don’t love him and every single action he takes? How many might have to be ‘re-educated’ to ensure they now ‘love’ Big Brother?
“But based on GAAP, it has lost money – lots of money – every year.”
I am sure this extends to a number of tech companies. The question I have is why Non GAAP is it allowed to continue. Perhaps because that is the same fraud the state is current using?
Non-GAAP is used because companies feel it is a better picture of near-term performance. Some companies are moving away from it due to government pressure, and instead just provide the data and allow analysts to calculate it for themselves.
Most of this in the tech world relates to software that has online functionality. Example, company sells 6 months of a software service, and customer pays up front.
GAAP – mandates that the revenue from the customer is spread out over the 6 months of the service
non-GAAP – recognizes the revenue from the customer immediately when they pay.
As a real example, say little Timmy gets a video game for Christmas. The game can be played online with other players. From the company side, they want to say “here’s how strong we performed at Christmas”, so they use non-GAAP which shows Christmas revenue. From the government standpoint, they want that revenue to be recognized over the course of the use of the game. Reasoning is the company is spending money on supporting that game (e.g. running servers and providing support).
Yeah, but Twitter doesn’t sell SaaS. It doesn’t sell other subscriptions or long-term contracts or whatever. It sells ads.
Admittedly I don’t know why twitter does it, all I’ve seen mentioned is that non-GAAP doesn’t include stock-based compensation.
I have 2 words for this social media advertising BS: False Paradigm.
A false paradigm is a mental model of the way a complex system works that is incorrect, leading one to make incorrect guesses about unavailable information, to misinterpret available information, and to make incorrect predictions about the future.
“Not enough Americans can figure out why on earth they should use it”
Maybe too many people know damned well why they don’t?
Exactly. Unless of course, you are interested in my random thoughts at 3:00 AM. In which case, I can just write them down in Notes and e-mail a transcript to you. :)
And why not? Maybe they should learn to use it.
Not sure why people crap on Twitter. Didn’t Twitter help in revolutions in Africa and the Middle East? Twitter is the channel of choice of independent journalists, activists and wistleblowers.
I bet the education and sophistication (I’m tempted to use the expression “IQ” here) of frequent Twitter users is on average significantly higher than that of frequent Facebook users. The image that comes to mind is Twitter is the sheepdog and Facebook is the sheeple.
Note: you don’t have to follow the random thoughts of meaningless people. You can follow bright minds and interesting people.
I have a twitter account that I almost never use. ONCE, I used it to message the power company because their website and phone were all down during an all day power outage and I was at wits end. Actually that event was the reason I set up the account and I’ve never used it again! So if I’m representative of the average user, they have to be in trouble. On the other hand, I don’t use FB either, so maybe I’m not the intended audience.
You hit the nail on the head. They count any user…even a one timer as a user to be advertised to. Kind of like dead people voting.
Speaking of dead people….noticed that friends/family who have passed away are still “liking” or recommending products on FB. So Internet Bots have taken over that Soul and they all seem to “like” Clorox.
There is no transparency in Social Media advertising. Since sales are down or flat across the board, companies are desperately throwing money into every hyped social media platform hoping some of that spaghetti will stick. Meanwhile all of us tune it out. Instead of wasting so much money on worthless ads, they should put the effort back into the product. Quit the product shrink, quit the lower quality supply chain, provide actual service…then the buyers will come.
That takes time and Bezos’ kind of vision.
Used to be business 101, but rare, these days.
Hear hear! Actually I deliberately buy store brand products for this reason – I don’t feel like subsidizing advertising.
On the topic of FB, wanted to mention that not only are ads annoying, the worst are friends pushing pyramid schemes. So I have strong negative associations with FB, I really don’t understand it’s appeal! I use it every once in a while if I’ve lost someone’s contact info, can’t even think of what else it’s good for. Oh people send event invites, but there are better services than FB for that.
I always figured that Trump must have stock in twitter. In any effect there’s no need to set up a twitter account just to see his post because they’re always plastered everywhere else included on Facebook.
Twitter does not offer a service that you can’t get anywhere else, so it will never be profitable. I don’t have a twitter account but I’m well aware of the most controversial tweets from day to day. Why join?
I think the new paradigm is for young tech workers to hop from one high paying but doomed tech startup to another, like jumping between sinking logs until they strike enough cash to not have to.
Who needs stability when you can get free senseless IPO money.
Snapchat will go the way if Twitter while ensuring high paying jobs for some and that the young CEOs get rich.
You don’t buy stock in companies who’s products you get for free. You buy stock in companies who’s products you don’t mind paying for.
And I don’t know of anyone who would pay for twitter, or Facebook for that matter.
That’s the old way of thinking.
The product is YOU, information on you. You give that for FREE to Facebook, Google, Twitter, Amazon, MS, Apple, etc. And their product is ultimately the control of you.
Old adage, ‘there are always too many ads until you want to buy something, then there aren’t enough’.
There is a corollary to that: “The man without a dime sees many bargains”.
Even YouTube gives me the shits. Used to be no adds. Then when the adds came you could quickly click Skip Add. Now they make you watch the whole bloody thing.
1. add blocker
2. don’t sign in
now watch youtube with no interruptions.
Of course if you don’t mind a few adds, click on the ones for the companies you hate. Every click sends the a bill. Take a few seconds every day to “vote” on the companies you hate. Over a year you can send them a nice bill.
Of course on this site, click away and let Wolf get some coin.
WOLF’S SITE :
I bought a small set of Forever Tops yesterday, after clicking through from Wolf Street :
I know this is likely none of my business — because IT IS NOT — but in what range might the value be to Wolf ?
(i) cents ?
(ii) a dime ? ?
(iii) a dollar ? ? ?
Remember, I did not just click through, I actually purchased product.
SnowieGeorgie
Forever tops..? You bought them?? I saw those being advertised. More fun than a pet rock, maybe.
Thank you for buying from one of the millions of sponsors that make this site possible. I have no idea what ads you see. This site servers several million ads a month. It’s automated. The amount per click is established during an instant auction milliseconds before you see the ad. That amount various dramatically. It’s small but given the large number, it adds up. There are other ads on this site, like those for TDWaterhouse, which go through my ad agency, and they pay differently.
Making money on line, like Twitter and I do, is a tough business.
@MyGlassEgg
I am a metals guy. As a “non-work” kind of thing, ( not a hobby ) I make “necessary” things out of copper, brass, stainless steel and especially aluminum. My millennial makes things out of Titanium, and my office at work contains some of his “first run” setup pieces, including some human implants, and also parts for Woods Hole submersibles. Great stuff, and very expensive when completed.
The Forever Tops are CNC machined just like the titanium stuff my kid makes.
The tops are superb and worth every cent. Beyond that, as a metal and mineral lover, I can state this for sure : Most people have never held a piece of PURE titanium, tungsten, magnesium or nickel in their hands.
That alone made them worth the price. Our cats like them too — at least for a while, just like anything else.
I don’t have the tungsten one yet, but I will soon. hard stuff ! !
SnowieGeorgie
@SG-I enjoy and usually resonate with your commentaries on Wolf’s excellent site. A pleasant bonus to find you also relish in what too many today would see as hand-dirtying, knuckle-skinning endeavors that yield what is probably engineering art. Kudos!
Snowie,
Thanks for sharing your hobby. It coincides with my theory that investments in metals should be in those with utility. I would prefer all the metals you listed over gold, although I like silver as well, because of its utility.
@Petunia — my metal hobby
My metal hobby is a sensible hobby. We live in a smallish 3-decker condo, and I need some tall ladders which I necessarily STORE OUTSIDE, in all weather ( locked up with Schlage and Kryptonite chains ) .
The protective plastic caps on the end of the ladder’s vertical rails have deteriorated badly after ~30 years in the sun, heat and cold. Brittle, discolored and cracking badly.
Here are the end caps at the Werner ladder
After I installed the first new plastic caps, I dope-slapped myself. I then made an exact replica out of aluminum blocks, using only a hacksaw, a file and a drill. Oh yes, and a sanding belt to smooth the finished part.
Now I have permanent and weather proof, almost eternal end caps, for about ten dollars of aluminum, and a half hour or so of cutting sawing, filing and drilling the aluminum stock I bought online.
BTW, I have owned Werner ladders for about 40 years. Werner uses aluminum for many of the ladders, but the dammfools use steel rivets, inexcusably, to fasten the plastic end caps and other accoutrements onto their ladders.
Inexcusable, and aluminum or even stainless steel rivets would work as well ( if not better ) AND NEVER RUST ! ! ! Duh !
I have fixed everything I own that can be fixed with metal that I purchased online. Only possible if one has the inclination, the time and some native skills.
Look at the link . . . .
SnowieGeorgie
I like to see what Trump has to say on Twitter. Nobody else there interests me. Pull up his twitter on a webpage and it is ad free, but if you join then it gets cluttered with ads and other peoples twits. Great incentive to not sign up.
Oh I forgot twitters other use was to organize riots which I don’t follow either.
I use Twitter as a filter to get a quick look at what people that are of interest to me have to say. I also get a quick digest of news about various topics that way. The 140 character limit forces people to think about the message they want to convey so it eliminates the extraneous babble. One can always Google the subject if more info is wanted.
its short attention span theater/spammer forum. a way to sling short and typically uninformed and opinionated comments. A good place for Egocentric people who are not interested in rational debate.
” a way to sling short and typically uninformed and opinionated comments. A good place for Egocentric people who are not interested in rational ”
You probably never really used it or you are following the wrong people.
This and also I use it to aggregate articles / ideas of interest that are being tweeted by influential people. It saves me a lot of time because I am not regularly visiting the source websites.
Fakebook is populated by a lot of family/friends and they share personal information, but rarely articles of interest.
Most people do not make much time to read articles/research, so I imagine that Twitter’s best uses will not be useful for them.
One of the few who gets it, it seems.
I guess this inherently makes Twitter less of a social media for the masses (in terms of users engagement): it requires a certain level of sophistication. For the masses, there is Facebook.
The real asset of those sites is the average mind content of people. This wisdom might already being translated to dollars by so many indirect ways or by other “friend” companies but not showing in the traditional accounting numbers
Companies like Twitter and Facebook can only make money by selling ads to other businesses. Advertisers still don’t have a good way of measuring the effectiveness of such ads on their own businesses. It appears that, for now, companies such as Facebook and Google have been more effective at attracting ads, whereas Twitter has not. Perhaps it will go the way of Pets.com and Webvan and those websites that promised quick delivery of snacks while you were watching TV at home.
For my money, can’t happen soon enough.., I can live with Google but Facebook can also disappear as far as I’m concerned
It’s either buy gold or buy longest term Facebook puts, no?
FB is way intrusive but I have to admit that I’m on Twitter (dodges bricks). It’s a “brand thing” (I’m a publisher/writer).
One thing I’ve noticed are the eye-watering rates for advertising on Twitter. What you get for one click on Twitter will buy you 5 or more clicks on FB. I’m wondering if the gouging is born of desperation.
I like Twitter because it’s a way of keeping in touch with other author friends overseas and less cumbersome than email, but I won’t cry an ocean if it’s gone.