Jack Dorsey Loses Big on TWTR Stock
Twitter Inc (NYSE:TWTR) can’t seem to catch a break and neither can its chief executive officer, Jack Dorsey. After an earnings miss in late April, TWTR stock dropped by 17%. It was an expensive earnings announcement for Dorsey.
He’s also the CEO of Square Inc (NYSE:SQ), a payments company that went public last year. Square also had a bad quarter, bringing his total losses for the week up to $340 million. (Source: “How Jack Dorsey lost $340 million in two weeks,” MarketWatch, May 6, 2016.)
Ouch. That’s a steep loss even for someone as wealthy as Dorsey. It seems as though investors are growing impatient with his supposed “turnaround” plans for Twitter.
Despite implementing a bevy of new features, Twitter’s audience engagement was still flat. It had a bright spot in monthly active users, which hit an all-time high of 310 million, but that was the only good news.
The numbers were either bad or terrible, depending on which angle you viewed them from.
The company’s $594.5 million in revenue for the quarter fell short of analysts’ estimates. It was 36% higher than the same quarter a year before but the market had been expecting $607.8 million. You could call that bad. (Source: “Twitter posts disappointing revenue and forecast,” MarketWatch, April 26, 2016.)
Twitter also dialed back revenue expectations for the next quarter. It now only envisions somewhere between $590 million and $610 million, way below the previous estimate of $678 million. That was also bad.
But look at the lower-than-expected revenue against a backdrop of broad social media trends, and the situation quickly goes from bad to terrible. Online video is supposed to be the next gold mine for social media companies.
Twitter was supposed to dominate online video. The success of “Periscope,” its video streaming service, was pretty much on lock. It had 200 million broadcasts in a single year, and users were streaming one million hours of video a day. (Source: “Twitter’s Stock Is a Victim of Facebook’s Success,” Variety, May 3, 2016.)
Since advertising budgets were shifting from TV advertising to online video advertising, you would expect Twitter’s revenue to skyrocket. But it didn’t.
And you could call that terrible. It all depends on you perspective.
Meanwhile, Facebook Inc is crushing the industry with its “Live” video streaming. I know it’s not really fair to compare Twitter and Facebook, but everyone does, which is partly why Twitter stock is down this much.
TWTR stock fell 11% immediately after earnings came out. Then Facebook released its quarterly filings the next day, and the stock fell even further. The distinction between the two social media empires is not flattering to Twitter.
Facebook has more than five times as many users than Twitter. Not to mention the company has a flawless record on emerging trends.
Facebook bought Instagram at an early stage and made it bigger than Twitter is today. It has two dominant messaging apps to Twitter’s none. Whether it’s a fair comparison or not, Facebook’s continued success is making Twitter look like a loser.
Jack Dorsey needs to pull it together quickly, or else his net worth will collapse for good.