Twitter is a news company, not a social company

Are you a Twitter user? Did you ever read news from Twitter?

If so, you wouldn’t be alone.

You may noticed that Twitter has reclassified itself from Social APP to News APP in app stores in April 2016. Apparently, Twitter now is famous for real-time news feeds and events and unlike Facebook, it is preferred less when it comes to keeping in touch with friends. It is more about following people who share things you find interesting and relevant, whether you know them or not.

As of August 2017, around two-thirds of Americans report that they at least get some of news on social media, according to a survey from Pew Research Center. In all of the social media platforms, Twitter, with a 15% increase in 2016, has the highest portion (74%) of users who get news on in 2017.

In fact, about six in ten Americans get news from online channels in 2017. Surpassing TV, online (inc. Social media) is the most prominent news channel in US. Furthermore, over half (51%) of US adults get news via social media – up five percentage points on 2016 and twice as many as accessed in 2013.

More specifically, although Twitter has a smaller reach than Facebook, journalists – making up 24.6% of verified accounts in Twitter – use on it more and, therefore it has a greater influence on the news. Meanwhile, from another survey conducted by Globalwebindex, reading a news story is the most frequent activity of Twitters’ users.

Why do people use Twitter for news?

Because, comparing with the traditional news channels like TV, Twitter not only empowers its users to find real-time news at ease but also provides a platform for users to engage with others.

In other words, it all comes back to the role Twitter serves in the ecosystem, and what people use Twitter for. People see an event unfold in the world, and Twitter just ask a simple question: “What’s happening?”. And people start to comment on it. It’s able to not only deliver that news in real time, but also provide really interesting social commentary around the news, so that anyone can comment on what’s happening and give their own opinion.

So is Twitter a news aggregator?

Not really. Twitter is just a service, you need to have an account on the Twitter site in order to start sending your tweets or to follow other users. In contrast, it is not necessary to create an account on a news aggregator as you can freely use it. Besides, another major difference between news aggregator and Twitter is the limitation that Twitter has on entries as each entry can only contain up to 280 characters. This is not a technological limitation but one that the implementors of Twitter has opted to put in place in order to force users to be concise with their posts, leaving only brief news on this site. Further, compared to news aggregator, Twitter, with element of social interaction, empowers its users to interact with connections through each news posted.

What are the challenges for Twitter as a news company?

(1) News usership growth slowdown

With 15% growth of news usership in 2016, we believe it’s newsusership will continue to grow. However, with almost zero increase in user base from 2015, Twitter is only converting its current users to news readers to some degree. Therefore, with as high as 74% news usership in 2017, news usership growth probably will slow down in the next few years.

(2) Challenge from Facebook

Like Twitter, Facebook is another platform where users can not only find real-time news but also engage with friends. By far, Facebook, with a 66% market share in US, leads other social media sites as a source of news.

What’s more, compared to that of Twitter, Facebook’s user base is still growing rapidly. Tons of new users of Facebook start to read news from this site, leaving increasingly narrower room for Twitter.

Recent stock price movements

Twitter saw its stock rise over 31% in February 2018 after it posted record revenue of $732 million in Q4 2017. More specifically, international advertising sales have been robust. During the Q4 2017, they jumped by 18% to $302 million. Besides, engagement has been encouraging. For Q4, there was a 12% increase (although, the company did not disclose the number of daily active users, or DAUs).

However, even for Q4 2017, there was a mere 4% increase in MAUs (monthly active users) to 330 million. To put things into context, FB posted a 14% increase to a whopping 2.13 billion MAUs. Therefore, it is not surprisingly that Twitter’s stock price starts to fall in the middle of March. The chart of Twitter stock is just as important as the company’s fundamentals, as it reflects the market’s ever-changing opinion of the company’s future. Apparently, Twitter stock is overbought in February.

In the end, for the most part, Twitter is essentially a niche operator in the social media world. It started its service as a social networking platform, and then repositioned itself as an online news and social networking service provider. Instead of competing directly against Facebook, Instagram and others, the company has moved itself to a market where it can fully utilize its core competence.

Will a news aggregator instead of Facebook knock off Twitter in the future?

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