Wall Street is fretting over Twitter’s weak revenue forecast, pushing the stock down 12% on Wednesday.
But according to Macquarie Research analyst Ben Schachter, Twitter faces a bigger problem than the shortfall in advertising revenue.
Twitter “must improve its core audience engagement issues before its creators begin to leave the platform,” Schachter wrote in a note to investors on Wednesday.
Twitter has struggled to grow the size of its audience, which has been stagnant at around 300 million for more than a year. Meanwhile, younger rivals such as Snapchat and Facebook-owned Instagram are becoming increasingly popular among younger users.
The worry is that the “creators,” that is the celebrities, journalists, and video-makers who regularly post stuff on Twitter, might decide that Twitter isn’t the hotspot it once was, and could decamp to a different online service for their daily musings and content postings.
“As long as the creators are there, audience will be there for the content, but if the creators leave, all bets are off and we could head into an irreversible decline,” Schachter says.
“We have not yet seen any data to indicate that the creators are leaving, therefore, in our opinion, there is still time to address the problem, but we do fear that time is not TWTR’s side,” he notes.
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