Wall Street knows that Twitter has a problem attracting new users. But what nobody outside the company knows is exactly how many people use the service daily because the social media company does not disclose it.
Earlier this year, the U.S. Securities and Exchange Commission started an inquiry into the lack of information, and whether investors are being harmed by it, as part of its review of the annual report Twitter filed in February. While Twitter does report its monthly active user totals every quarter, along with the year-over-year percentage change in the number of people who use the service daily, it fails to provide daily active user numbers, or DAUs.
Rival social media companies like Facebook and Snapchat parent Snap report both their daily and monthly user stats. So, it stands to reason that investors would find it useful to see the same reporting from Twitter in order to compare it against its rivals.
In June, however, Twitter responded to the SEC by arguing that percentage growth of its daily users is a more important indicator than the actual number of users because it reveals the degree to which users are engaged in the service. The company told the financial regulators that it does not report DAUs in order “to avoid confusion” that may arise from comparing those numbers to those of other similar companies. Twitter argued that some rival companies, including Facebook, have varying definitions of daily active users and weighing those numbers against one another would be unfair.
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(At the beginning of July, the SEC responded to Twitter’s letter to tell the company that the regulators were satisfied enough by the response to complete the review.)
Previously, Twitter reported the percentage of its monthly users that visit the service on a daily basis, but only for its top 20 markets. The company told the SEC that it no longer discloses that ratio out of fear that investors would be able to surmise the total number of DAUs.
For what it’s worth, Facebook says it has more than 1.32 billion daily users, while Facebook-owned Instagram has 250 million and Snapchat has 166 million. Meanwhile, as Bloomberg notes, at least one analyst estimates Twitter’s own DAU count somewhere between 80 million and 100 million. In addition to the SEC, analysts on Wall Street have called for Twitter to reveal its DAU numbers to provide a more complete picture of the company’s user growth.
Last month, Twitter reported disappointing monthly user numbers (328 million) that were essentially flat from the previous quarter, sending the company’s stock plummeting. That news followed a relatively strong stretch for the company after Twitter posted its largest quarterly increase in monthly users (9 million) in the past two years in April. The company continues to trail social rivals like Facebook and Snapchat in the battle for users, which hurts Twitter’s ability to significantly increase ad revenue growth. In the most recent quarter, Twitter’s ad revenue dropped 8%, to $489 million.
