The recent trend in user growth, the heightened headcount turnover during 2016, the seemingly slow pace of innovation, and Twitter's premium monetization relative to FB on a time-spent basis is disappointing.
O&O Ad Revenue per MAU growth turned negative for the first time (-4% y/y), and we estimate that mgmt?s 1Q17 guidance implies a
meaningful worsening to start the new year (down ~20% y/y in 1Q17). Mgmt cited competition as a key contributor, though we believe a slow rate of innovation within its consumer-facing and ad products also played a role.
Mgmt?s wide Q1 guidance range highlights uncertainty and at the high-end implies a ~6% y/y revenue decline (the first decline ever in total revenue). We expect Twitter to experience revenue and margin challenges for the foreseeable future.
