Twitter Inc. (
fell for the third consecutive day on Mar 26, 2014, as share
price dropped 7.2% to $44.43 to close the day. Year-to-date,
Twitter shares have declined 34.2% as compared to the S&P
500's 1.1% gain.
Twitter is facing a number of issues that are troubling
investors. The growing popularity of
Instagram among U.S. smartphone users, ban in Turkey and
vanishing tweets are some of the concerns that have plagued the
short-message-service provider to date in 2014.
Recently, Instagram surpassed Twitter in popularity as a mobile
app among U.S. smartphone users. Per eMarketer, approximately 35
million Americans used Instagram at least once a month in 2013
versus Twitter's 30.8 million.
Instagram recently achieved 200 million daily active user base,
per Facebook. The photo sharing app has started selling
advertisements, which does not bode well for Twitter as
advertising brings the major chunk of its revenues.
Moreover, Twitter's recent experiments that include the addition
of the "share with followers" instead of retweets, much like a
Facebook "share" and a Facebook-type new profile page failed to
Twitter's ban in Turkey is also a headwind. The company recently
won a temporary injunction from a Turkish court, which will
restore access to Twitter after it was banned by the government
on Mar 21, 2014.
Reportedly, tweets were also vanishing from the website.
According to CNBC, the famous selfie of Ellen DeGenres,
disappeared from the platform for more than five hours. Twitter
said that a bug was responsible for the disappearance of tweets.
Twitter's service has also failed to impress its users. Per a
survey conducted by Deutsche Bank, Twitter needs better sorting
and filtering tools that will make message management easier for
However, the same survey showed that user engagement remains very
high, as nearly 50.0% of Twitter's daily active users use the
short-message service once a day. We believe Twitter's recent
initiatives that include tagging of photos for
Android devices will boost user engagement, going forward.
Moreover, according to The Wall Street Journal, Twitter is
expected to announce a new music service this week. The company
recently pulled off its music app from Apple's iTunes store. We
believe a new music service will boost Twitter's user base, going
Currently, Twitter has a Zacks Rank #3 (Hold).
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