The number of people actively using Twitter may actually be in decline (TWTR)
The number of people actively using Twitter by tweeting or creating new accounts peaked in August 2014 and is now in decline, a source with access to Twitter's user data tells Business Insider.
According to Twitter's official disclosure of "monthly active users" (MAUs), the platform's audience hit a high of 288 million in Q4 2014. But MAUs are defined as any user who logs in to Twitter, even if they do not do anything. MAUs thus count a lot of people who use Twitter passively, for instance through mobile phone lockscreen apps that ping Twitter automatically for updates.
Twitter does not break out the number of people who tweet or create an account within a given month. That number — which we're referring to as "people actively using Twitter" for the purposes of this article — is interesting because it describes the users who aren't just logged in automatically because they failed to log out from the month before. Rather, it describes users who are actively, intentionally using the system — Twitter's core audience, in other words.
That core might be in decline according to our source. People actively using Twitter hit a high of 145 million in August of last year, but since then the number tumbled to 129 million:
Twitter declined comment, citing the pre-earnings quiet period.
The company recently moved again to restrict data that gets seen by partner software and app development companies. Itterminated agreements with third parties for reselling so-called "firehose data" earlier this month, according to TechCrunch.
Last year, Twitter cracked down on other companies publishing independent user statistics based on Twitter's own data, kicking several of them off the company's API, which is used by developers to make apps and suck data out of Twitter.
The data from our source has flaws: It is not drawn from the full dataset which Twitter uses to compose the MAU counts it discloses to the SEC and investors. And it is composed from a series of sample counts of monthly users, on irregular dates rather than at standard periods.
But it might worry investors ahead of Twitter's Q1 2015 earnings call because it shows another way in which Twitter appears to have trouble growing users. According to Twitter's SEC disclosures, the population of users whose only activity on the platform consisted of a third-party app automatically pinging the platform for updates went as high as 25 million in Q4 2015.
Last year, Twitter's stock price was hammered down to lows of about $30 when investors realized that its MAU growth was going to be nowhere near the scale of Facebook's. But in the meantime, TWTR recovered nicely to above $50 as investors decided that Twitter's revenue performance — which is healthy — was more important than the growth of its user-base.
We also don't know whether the decline comes from a seasonal blip — the high was just after the World Cup — or a long-term trend.
This morning, Bank of America Merrill Lynch put out an investor note from Justin Post and his team that says most investors are expecting MAUs to grow to 302 - 304 million in Q1 2015. If Twitter reports a number beneath that level it will be regarded as a negative surprise. However, Twitter can still grow MAUs even when people actively using Twitter are in decline. So whether a decline in people actively using Twitter is meaningful or not won't be answered specifically on tomorrow's earnings call.
Disclosure: The author owns Twitter stock.
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