Twitter Inc (NYSE: TWTR)
Twitter has been having an incredibly hard time in the market for quite some time now, and for good reason. The company simply lacks the planning and willingness it needs in order to turn things around with regard to user growth. While I’ve mhad a relatively bearish opinion on the stock for some time now, my opinion has never been quite as bearish as it is now. At this point, I believe that TWTR is going to continue sinking until it disappears from the market. The best thing investors can do in my opinion is bail… quickly!!!Today, we’ll talk about why.
Twitter’s Problems Started The Day It Went Public
Have you seen Twitter’s stock chart? If not, I’ll give you a quick recap. When the company went public, the stock climbed to $69 per share over the course of a few months. However, after releasing its first earnings report, one thing became clear, TWTR simply wasn’t profitable! It can be argued that the reason the company wasn’t profitable was because it simply couldn’t seem to drive new users into the social network. As a result, the stock never broke the $69 per share price. Instead, it started to fall, and for the most part, we’ve seen nothing but declines since.
The Reason For Declines Hasn’t Changed
The reality is that in the entire time that TWTR has been traded publicly, the company hasn’t produced even a penny in profits. So, what’s the deal? Well, it’s simple. Over the past couple of years, the story has been exactly the same. In order for Twitter to generate profits, it needs to bring in more users. However, for some reason, they haven’t been focusing on driving new users to the network.
This fundamental lack of focus led investors to push for the resignation of Dick Costolo, the CEO of the company at the time. Of course, when investors push hard enough, they get what they want, and in this case, Costolo resigned. Soon investors cheered the resignation, and later, they cheered the fact that co-founder Jack Dorsey stepped in as the CEO of the company. At this time, I was screaming… DON’T GET EXCITED TOO FAST!
The reality is that Jack Dorsey hasn’t made many changes to TWTR, as expected. You see, he knows that the primary issue with the social network is that it can’t seem to drive users in. However, that’s not where his focus has been. Instead, Dorsey has been focused on bringing in more advertisers to make more money from the users it already has! This is yet another horrible move. As a website owner myself, I understand the importance of advertising. However, I also understand the importance of keeping a balance between advertising and user experience. This is something that TWTR simply doesn’t seem to understand.
The reality is that as the company continues to focus on advertisers, it’s leaving user growth on the back burner, and in my opinion, this is a recipe for failure. Of course, this can be seen from the user growth figures the company recently reported. Unfortunately, growth was sluggish once again.
The Bottom Line
The bottom line here is that if you haven’t lost faith already, you need to start running away from TWTR. The company lacks the fundamental ability to plan for user growth and follow through with these plans. As a result, users will likely continue to plateau, if not move backwards, and this will lead to poor revenue and earnings from the company. Unfortunately, things simply aren’t looking good for TWTR. If you’d like to stay on the sinking ship, you’re more than welcome to, but chances are that you will sink along with it!
What Do You Think?
Where do you think TWTR is headed moving forward and why? Let us know your opinion in the comments below!