How Twitter's attempt at self-regularisation has come at a hefty cost

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How Twitter's attempt at self-regularisation has come at a hefty cost

For many, Twitter has become the one-stop shop for picking up news and information. As viable as the website is, it also has some obvious downsides. One of which is the problem of fake profiles which are used to troll and mock other real users of the website.

In a bid to control this accelerating problem, Twitter is doing its best to remove these fake profiles by deleting them. However, there seems to be a side-effect in this attempt by Twitter to regulate its platform. From the business-module point-of-view, analysts have opined that Twitter has to deal with increased operating costs in order to carry out its regulating activity.

Although the company itself has shared that its operating expenses are around 0-3%, according to market analysts, in a report published in US News, the company's operating expenses could be significantly higher. Michael Nathanson, an analyst with MoffettNathanson shared, "After digging into the most recent (10 quarters), we would argue that true underlying cost growth has actually been materially higher in the range of 13-15%."

He also added, "Ramifications for Twitter's top-line have been well covered as our revenue estimates are close to the (Wall) Street's. Now, instead, we are most concerned about cost growth." As far as the stock market is concerned, Twitter has plunged to lows by about 36.6% in the last three months.

This also includes a one-day drop of 21% in July after the website shared that it had lost about one million active users in the month of July. Despite these downward trends in the stock market, certain analysts are upbeat that Twitter continues to retain its uniqueness in the industry, including Andrew Left of Citron Research who opined, "Twitter has never been more relevant than now, and money follows relevancy."