Being frank not enough, Twitter needs to act

Wed Jul 29, 2015 2:07pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Abhirup Roy and Tenzin Pema

(Reuters) - Twitter Inc (TWTR.N: Quote) interim CEO Jack Dorsey's harsh criticism of the company's efforts to woo new users may just be the first step to addressing its long-standing problems.

But being frank is not enough, particularly for a social media company struggling to sign up subscribers.

Twitter needs to act fast - simplify its core product and organize news feeds better, analysts said.

Wall Street took a dim view of the management's commentary on a post-earnings call on Tuesday. At least 19 brokerages cut their price target on Twitter to as low as $30 - 18 percent lower than the stock's Tuesday's close of $36.54.

Investors were harsher. Twitter's shares skidded more than 13 percent to $32.15 on Wednesday, wiping out about $3 billion of the company's market value.

Twitter co-founder Dorsey, who took over last month from Dick Costolo in the midst of criticism over the company's strategy, warned on Tuesday that Twitter was unlikely to see sustained growth in monthly active users (MAU) until it can reach the mass market.

The company reported its slowest growth in MAU for the second quarter since it went public in 2013. Core MAUs rose only 2 million to 304 million. That number pales in comparison to Facebook Inc's (FB.O: Quote) 1.4 billion users.

Dorsey said the company would focus on more disciplined product execution, simplify the website and better communicate Twitter's purpose.   Continued...

The Twitter logo is shown on smartphone in front of a displayed stock graph in central Bosnian town of Zenica, Bosnia and Herzegovina, in this April 29, 2015 photo illustration.  REUTERS/Dado Ruvic