What to Expect from Twitter Stock
Twitter, Inc. (NYSE:TWTR) has been pummelled by investors in recent weeks, prompting me to ask the obvious question: is this the end for Twitter stockholders? The company’s stock is down more than 8.2% in the last three months, suggesting that markets have lost faith in the social media firm. But fear not, Twitter stockholders; some hope remains.
Twitter stock has been plagued by confusion all year. With lagging subscriber growth and stagnant ad revenue, the board of directors decided it was time for action. They fired CEO Dick Costolo, sparking some optimism that TWTR stock might find its groove again.
But the confusion continued.
The board brought back Jack Dorsey, a founding member of Twitter, to drag Twitter out from the weeds. But Dorsey was also running another company called Square, Inc. Rather than pick one job; he decided to do both, thus keeping TWTR stock in a state of disarray.
Keeping TWTR Stock Alive
Jack Dorsey’s first move after returning to save Twitter stock was trimming the fat. Twitter had grown bulky during recent years, mostly as the result of a bungled vision. He let go of 336 employees to clean up the efficiency of the company.
By streamlining Twitter’s engineering department, Dorsey looks to be injecting a touch of the old startup mentality into Twitter stock. Technology firms perform best when their brightest minds get room to innovate. For instance, Google, or Alphabet Inc. rather, famously gives its engineers some portion of the week to work on whatever they feel like.
Innovation needs space to breathe so it can grow into something worthwhile. Hopefully, a smaller and more energetic team at Twitter can drag TWTR stock out of the mud.
Originally, the firm’s acquisition strategy was meant to build a suite of products around the core function we know and love as Twitter. But things didn’t go as planned.
The architect of that strategy, Jessica Verrilli, left Twitter a few years back to join Google Ventures. Now she’s back to help follow through on the acquisition strategy so that Twitter–and its stock–can fulfill its potential. (Source: “Jack Dorsey has already brought back a key M&A exec to Twitter from Google,” Quartz, October 30, 2015.)
Unfortunately, that means that short-term profits may not grow as quickly as Twitter stockholders would like. But the investments may ignite some much-needed life in the stock, providing the firm some sort of competitive advantage.
The best model for Twitter to follow is Facebook Inc. Facebook stepped into the publishing game in a big way with the advent of Facebook Video and Facebook Instant Articles. The new products are giving Facebook a new edge and new monetization strategies. Investors are loving it.
Twitter Stock Continues to Get Pummelled
Then Twitter stockholders saw the massive drop in quarterly earnings and confidence drained out of Twitter stock. A subpar performance weaved yet another thread into the dismal story of TWTR stock. To put it mildly, things aren’t going well.
Twitter’s stock has been a disaster for nearly its entire public life, having fallen more than 31.2% since its initial public offering during November 2013. In the meantime, shares of Facebook Inc. have more than doubled in value, showing that the decline of TWTR stock wasn’t pessimism in the market. Internal factors were weighing on Twitter stock.
But investing isn’t about what happened to stocks in months passed, it’s about what could happen to them in the years to come. So there are some questions we should consider: how could Twitter’s present-day shifts alter its performance tomorrow? And how, in turn, will that move the price of TWTR stock?
Twitter needs a Facebook-like approach to reignite its subscriber growth—only then will we see a revival. All in all, there is some hope yet for anyone holding Twitter stock.