Recent Wall Street reports revealed that major social networking sites like Twitter and LinkedIn are barely keeping up and might be hanging by a thread. Both the social networking sites had Wall Street worried as they displayed a drop in user growth, something a social networking site needs in order to grow.
Twitter and LinkedIn are both social networking sites with different intended purposes. Twitter focuses on developing a platform for users to socially interact with peers or with other users. LinkedIn on the other hand focuses on establishing a mode for people in professional occupation to interact on a much more formal level. While both of these sites have different audiences, they ultimately depend on user participation and user growth to flourish.
LinkedIn reported a 47 percent increase in the revenue year over year but it was also accompanied by the news of over 60 percent drop in net income. Similarly while Twitter saw an increase in sales and revenue, user growth was still at an all-time low. Ramifications of dwindling number of users could include both of these sites losing the competitive edge in the market. While revenue for both the companies has been good, investors are still worried over the future of the companies. Although the fate of Twitter and LinkedIn barely hangs in the balance, both the sites are confident they can still make these numbers go up.
LinkedIn might have an explanation for the sudden drop in number. The company has recently invested in improving infrastructure and implementing policies that would later on help maximize profit. The company also bought an online job matching site Bright.com which is why the yearly balance sheet for the current fiscal year might read negative numbers. 2014 might be a slow year but LinkedIn predicts that from next year on these investments would help bring the company back up. Similarly Twitter, even though facing drops in user growth, had overall better figure even compared to Facebook. It had an approximately increase of 40 percent in sequential growth.
These numbers might not make such a big difference to the companies for now but they are enough to scare the investors away. If an effort is not made to bring the stats back in favor, many might be hesitant to invest their money in the company which might prove troubling later on. Many experts even believe the very growth of the company to be the source of their problems. They believe that as a company gets bigger, it gets harder to maintain and function. However regardless of the statistics, neither of the companies has declared nor confirmed whether they have suffered a major blow. As such it can be assumed that the damage to some degree is bearable.
Twitter can still possibly make user experience changes to attract a larger audience while still keeping the current users satisfied. LinkedIn might make better use of their newly acquired website to provide better features and ensure that more people are drawn to it. For the moment Twitter and LinkedIn might be barely hanging in the competition but it is not yet certain if the companies will cover up or will the burden prove unbearable.
By Hammad Ali