Twitter's attrition rate a challenge ahead of IPO
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E-mail Shanghai Daily via agencies, October 21, 2013
Retired schoolteacher Donald Hovasse signed up for Twitter about a year ago at the urging of his daughter. He lost interest after trying the service a few times and finding lots of celebrities but few of his friends using the online social network.
"I didn't really get the point of it at all," said the Las Vegas resident. "Most of them were people I wasn't interested in hearing what they had to say anyway." He said, however, that he does check Facebook every day to see what his friends are up to.
Hovasse's experience highlights a risk for investors as Twitter Inc marches towards this year's most anticipated initial public offering in the United States, expected to begin trading on the New York Stock Exchange in mid-November.
According to a Reuters/Ipsos poll conducted October 11 to 18, 36 percent of 1,067 people who have joined Twitter say they do not use it, and 7 percent say they have shut their account. In comparison, only 7 percent of 2,449 Facebook members report not using the online social network, and 5 percent say they have shut down their account.
People who have given up on Twitter cite a variety of reasons, from lack of friends on the service to difficulty understanding how to use it. Twitter declined to comment for this story.
Twitter's attrition rate highlights a challenge that has dogged the online messaging site over the years: while it has managed to enlist many high-profile and avid users, from the Pope to President Barack Obama, Twitter has yet to go truly mainstream in the way Facebook has.
Convincing ordinary people to think of Twitter as an indispensable part of their lives is key to its ability to attract advertisers and generate a profit.
Twitter reported it had 232 million "active" users - people who access the service at least once a month - at the end of September, an increase of 6.1 percent from the end of June. Twitter's quarter-over-quarter growth in active users has not exceeded 11 percent since June 2012.
When Facebook was a similar size, its active users were increasing by more than 20 percent every quarter, and it was not until the social network neared the half-a-billion member mark that its user growth decelerated to 12 percent.
"Twitter is a great service, it's still got growth in front of it. But in my opinion, I would say the opportunities are less than that of Facebook, and it has to be valued appropriately" said Dan Niles, chief investment officer of tech-focused hedge fund company AlphaOne Capital Partners.
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