Twitter is a ‘tool for dads’: Analyst

Twitter is a "tool for dads" - and that is one of the main reasons it has struggled to grow its user base, according to one analyst, who highlighted the social media platform's challenges ahead.

In comparison with rival social media service, Facebook, Twitter is aimed more at businesses and older users, said George O'Connor, technology analyst at Panmure Gordon.

"Facebook is Facebook and one of the big drivers that we are seeing is that there's this wonderful sort of consolidation about the power of the market leader and Facebook is the consumer big play," O'Connor told CNBC in a TV interview on Monday.

"Twitter is more of a business-y play. So for example, my children do not use Twitter. I use Twitter. It's a tool for dads."

Twitter turnaround

The comments came just a day before Twitter reports its third quarter earnings, amid a tumultuous time for the company.

In June, former chief executive, Dick Costolo, stepped down and Jack Dorsey, one of Twitter's co-founders, took over the reins.

Twitter headquarters in San Francisco.
Adam Jeffery | CNBC
Twitter headquarters in San Francisco.

Then, in October, Twitter said it would cut up to 336 jobs or 8 percent of its global workforce. Dorsey issued a pretty blunt letter briefly outlining Twitter's "streamlined roadmap" for its services, which include Vine and Periscope. In a move to boost morale, Dorsey said that he would give a third of his holdings, or 1 percent, of the company to the employee equity pool.

Dorsey has also moved to release new features more quickly. Twitter unveiled "Moments" earlier this month, which allows users to browse the biggest stories on Twitter without having to follow any accounts or search for hashtags. And just last week, the company announced that it was testing "promoted moments" in a bid to monetize the service.


Monetizing Twitter

The concern over Twitter's ability to significantly grow its monthly active users (MUAs) – a key metric – and monetize them has weighed on the company's stock, which has fallen nearly 40 percent in the last 12 months.

Average MAUs came in at 304 million for the second quarter, 12 percent higher than a year earlier but only up slightly from 302 million in the previous quarter. Dorsey admitted at the time that he was not satisfied with the numbers.

Last week, Morgan Stanley downgraded Twitter's stock to "underweight" with a price target of $24.

Analysts agree that Twitter needs to focus on how to make money from the service and grow its user base in order to please investors.

"That's what Jack's role now is – to try and understand the monetization of Twitter. All they have done so far is build a great big website where people talk to each other. They have not addressed the monetization of the platform," O'Connor told CNBC.