Can Twitter Live Up to its Pre-IPO Hype? (TWTR)
While investors wait for Twitter's impending IPO, expected as early as next month, a new survey suggests the microblogging and social networking site may be facing a consumer plateau.
A recently-released Reuters/Ipsos online survey of nearly 1,100 people who have joined Twitter (NYSE: TWTR) says over one-third do not use the site and seven percent have shut their accounts. The so-called “Twitter Quitters” tell Reuters they've given up on the site for a number of reasons – including confusion on how to properly use the service and a lack of friends on the site.
Twitter would not comment on the poll, telling Reuters the company “is in a quiet period ahead of its IPO.” But the blogosphere has been lit up for some time now with stories questioning whether Twitter's user growth was living up to its hype.
The web site AllThingsD estimates Twitter now has around 240 million users – which means the site has been growing by around 4.5 million users a month this year. And if it stays on that growth track, it would mean an additional 260 million Twitter users for 2013. As AllThingsD notes, Facebook(NASDAQ: FB) grew its user base by a comparable 33 percent in the 12 months ahead of its IPO launch in May of last year – although Facebook already had 900 million users at the time.
But at least one analyst wonders if Twitter can live up to investor expectations.
"Twitter is a great service, it's still got growth in front of it,” Dan Niles, chief investment officer of AlphaOne Capital Partners told Reuters. “But in my opinion, I would say the opportunities are less than that of Facebook, and it has to be valued appropriately.”
Twitter allows users to send out messages of 140 characters or less, and has proven itself a useful tool for news organizations, celebrities and world leaders looking to rapidly transmit information online to a broad audience.But “tweeting” still has a club-like atmosphere, and requires the new user to get used to using hashtags, Twitter-specific abbreviations and the site's unique user culture.
"The average person that's coming on here, they're still baffled by it," Larry Cornett, a former executive at Yahoo (NASDAQ: YHOO)and former designer at Apple (NASDAQ: AAPL) , said in an interview with Reuters."If they want the mass adoption and that daily engagement,” he added, “they have to make it really easy for people to consume."
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