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Trump tweets won't save Twitter

Since Donald Trump was elected president in November, the overall stock market, and particularly tech stocks, have done pretty well, with one exception: Trump’s favorite social media service, Twitter.

That was plain for all to see on Thursday, when Twitter revealed its first sales numbers since Trump took office Jan. 20— disappointing revenue and a widening loss — which sent its stock down 9 percent in midday trading. The numbers show that even though Trump puts Twitter in the headlines on a daily (sometimes hourly) basis with unfiltered missives dashed off from his Samsung Galaxy S3, it really isn’t helping Twitter much as a business.


“The president’s use of Twitter has broadened the knowledge of the platform and how it can be used,” Twitter CFO Anthony Noto conceded, but “it’s very hard for a single person to drive sustained growth.”

And it is hard to overstate just how badly Twitter could use the help:

  • Twitter’s net quarterly loss more than doubled, from $80 million to $167 million.
  • Advertising revenue, which is almost all of Twitter’s revenue, is right about where it was in 2015: $640 million.
  • Monthly active users, Twitter’s preferred metric for measuring its audience, inched up 4 percent from 305 million at the end of 2015 to 319 million at the end of 2016.

Among some positive signs for Twitter, the company anticipates revenue as a whole to move slowly upward in 2017, instead of remaining flat like it did over 2016. And Twitter CEO Jack Dorsey said that in the face of Google and Facebook’s stranglehold on digital advertising (and Snapchat poised to ramp up its own ad services), Twitter plans to use 2017 to launch new ad products to fix what isn’t working.

One particular sore spot for Twitter financially is the amount it shells out in equity to its employees. In 2014, the company tweeted today, stock-based compensation accounted for 45 percent of Twitter’s expenses. Three years later, that number has improved to 24 percent.

But weighed against the industry standard for stock-based compensation, it’s still very high, and suggests it will remain hard for Twitter to find a buyer. And unless Trump’s anguished tweets start to boost Twitter’s ad revenue, further reducing the equity paid to executives and staff might be the company’s best hope at a sale.