Twitter shares sink 11% on sluggish growth

CEO Dorsey’s turnaround plan yet to take hold

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Twitter shares sink 11% on sluggish growth (Getty Images)
By  Stephen McBride Published  October 29, 2015

Lacklustre third-quarter user growth and dismal Q4 revenue projections led to an 11% dive in the Twitter's share price in early trading yesterday, Reuters reported.

Expectations had run high that growth in Twitter's stagnant user base could recover under recently appointed chief executive Jack Dorsey. But some analysts are unconvinced that Dorsey's ideas will bear fruit.  

"While we believe many of the growth initiatives highlighted by 'new' CEO Jack Dorsey are promising, it remains less clear whether these will translate into more active user growth and engagement," wrote analysts at Baird Equity Research.

Dorsey, a Twitter co-founder who held the CEO role on an interim basis for around four months before his formal appointment, has overseen the introduction of several features to the microblogging platform. These include polls in tweets; a "Moments" feature, which allows users to nominate the day's best tweets; and a "buy now" button. He also announced job cuts amounting to 8% of the company's workforce.

"We have been singularly unimpressed with Moments, and view the service as no different or more interesting than a typical home page on any competing news site," said Wedbush analysts.

Other analysts were critical of Dorsey's split focus, as he also serves as CEO of Square Inc, which is preparing for an IPO.

"We don't believe a non-fulltime CEO is an ideal solution for Twitter today," said analysts at RBC Capital Markets.

Twitter's fourth-quarter revenue forecast was between $695m and $710m, well below an average of $739.7m projected by analysts.

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