Can Twitter save itself?

The social network is slowly gaining users, but still lags far behind rivals. Is a turnaround possible?

Terry Collins Staff Reporter, CNET News
Terry writes about social networking giants and legal issues in Silicon Valley for CNET News. He joined CNET News from the Associated Press, where he spent the six years covering major breaking news in the San Francisco Bay Area. Before the AP, Terry worked at the Star Tribune in Minneapolis and the Kansas City Star. Terry's a native of Chicago.
Alfred Ng Senior Reporter / CNET News
Alfred Ng was a senior reporter for CNET News. He was raised in Brooklyn and previously worked on the New York Daily News's social media and breaking news teams.
Terry Collins
Alfred Ng
3 min read

It appears that on social media, we're way more into pics showing the chicken dish you made last night and selfies of Selena Gomez and the Kardashians than President Donald Trump's tweetstorms.

On Wednesday, Twitter said it gained 9 million more monthly active users since the end of 2016, jumping up to 328 million users overall. That's 7 million more than analysts predicted and the social network's strongest quarterly gain in two years.

Twitter saw an slight uptick in user growth, but it still lags behind rivals Facebook and Instagram.

James Martin/CNET

But that's meh compared with Facebook-owned Instagram, which said Wednesday it grew 10 times as fast, tacking on 100 million new users since the end of last year. It now has 700 million users, more than twice as many as Twitter. And let's not forget that Facebook has nearly 2 billion users as well.

But Twitter still isn't giving up as it struggles for relevancy, even at a time when Trump continues to use the platform as his sounding board. Twitter CEO Jack Dorsey says the company has been trying more tactics to make famous tweeters and tweets easier to find. It's also taken steps to curb abusive behavior from anonymous users.

And, it's still hoping that livestreaming events, ranging from sports to music to political satire, will bring success, despite losing its marquee sports event after e-commerce giant Amazon outbid it for the rights to stream NFL Thursday night football games.

Anthony Noto, the social network's chief operating officer, said during a call with investors Wednesday that Twitter streamed 800 hours of video during the first quarter. He touted a Grammy's red carpet pre-show that drew more than 5 million viewers.

But Twitter is competing for video ad dollars with Facebook, YouTube and Snapchat in an arena that's predicted to reach $13.2 billion in spending in the US this year and $22.2 billion by 2021, said e-Marketer analyst Debra Aho Williamson.

"We'll need a few more quarters' worth of data to know whether this is a solid upward trend or not (for Twitter)," she said.

Twitter said while its monthly user total climbed 2.8 percent, its daily active users grew 14 percent year over year, though it did not disclose an actual figure. Still, it's a further sign that those already on Twitter are using it more.

Noto attributes the slight user increase to Twitter's growing presence in politics, citing Trump's must-see tweets, along those of other world leaders and political activists.

"Having political leaders of the world, as well as news agencies driving (politics) reinforces what we're best at," he said.

The user growth, however, isn't exactly making Twitter rich. Sales fell to $548 million in the period, down 8 percent from this time a year ago, yet beating the $509 million revenue estimates of analysts surveyed by Thomson Reuters.

As a result, Twitter shares had climbed as much as 11 percent Wednesday.

Dorsey said during an earnings call Wednesday with investors that the company continues "to face revenue headwinds."

"We believe that executing on our plan and growing our audience should result in positive revenue growth over the long term," he said.

Twitter's work is far from over, said Forrester analyst Erna Alfred Liousas. While she agrees with Noto's rationale that the uptick in user growth was organic, there really hasn't been much upside for users or advertisers to join the social network.

"Twitter must deliver consistent progress across the user experience for all audiences to meet their goal of making it the place that users go to first," she said.

James Cakmak, an analyst with Moness, Crespi, Hardt & Co., said earlier this week that Twitter needs to do an "about face" on getting more users and making more money. He didn't waver on Wednesday.

"We are unsure of the sustainability of this performance going forward," he said. "We give credit where credit's due, but at this time, we believe it's prudent to remain on the sidelines until a more cohesive strategy is in place and a track record longer than one quarter is set."

First published, April 26 at 4:16 a.m. PT.
Update, 12:05 p.m.: Adds more analyst commentary.

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