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Twitter’s stock falls toward IPO-level prices

• akrymski 11y ago
  Twitter's valuation is down to $19B, which is what Facebook paid for WhatsApp. I wouldn't be surprised if Facebook would make a bid for Twitter at this price, even though FB+Insta combo seems to be killing them. I can't believe Twitter's product people are so asleep at the wheel. The success of Instagram shows how consumers want to consume content. If twitter was as simple as Instagram (and got rid of its silly 140 char limit) then it would have a chance of going mass market. You can already tweet photos, videos, but not more than 140 characters? Really? You can't have threaded comments? It's a mess, and the management is much too afraid to change the product. Zuck made many changes to FB over the years with users revolting at every stage. Twitter stood still. It's obvious now which strategy is the right one. Twitter needs to grow up and get serious if it wants to grow beyond its niche.
• Domenic_S 11y ago
  One of the disappointments for me about Twitter has been the lack of engagement. Many (most?) people use it as a broadcast medium. The longest, most engaged threads I see are (big surprise, internet) trolling and fighting. Here's an idea: gamify engagement for verified accounts. If you're a big enough personality to have a verified account, you must @reply to, say, 1% of your followers before you can write another naked tweet. Or you can buy tokens that let you tweet without forced engagement, price determined in part by your follower count. For a normie like me, the novelty of seeing your favorite celeb or software hero or whoever on twitter quickly wears off once you realize they send tweets once in a blue moon and never reply. You might as well be on their mailing list instead.
  • abritinthebay 11y ago
    While a novel idea... that would pretty much kill Twitter dead.
  • eterm 11y ago
    Celebrities are only on Twitter because it is a broadcast mechanism. It is precisely the unidirectional nature of Twitter that meant it caught on for the media industry. Without that it would be nothing.
    • Domenic_S 11y ago
      But we don't need another mechanism for celebrities to beam their thoughts into our heads, and I think that's become pretty evident by the slowdown in user adoption. Twitter could differentiate by being the place for celebrity engagement. Clearly some exceptions would have to be made, e.g. for news agencies and such.
      • jerf 11y ago
        Celebrity engagement is essentially impossible. The numbers don't work. No celebrity can "engage" with a million people when there's only 86,400 seconds in a day. If you don't like the "million", put whatever number you like in there that is still comfortably greater than the number of seconds in a day. Engagement doesn't scale. You can create the illusion of engagement, but that's all. Note the lack of the word "Twitter" in the reply up until this sentence. It's not even about Twitter. It's just generally impossible.
        • erehweb 11y ago
          Correct. However, the illusion of engagement can be powerful. e.g. Obama and Clinton campaigns were able to use dinner w/ candidate or famous supporters as a fund-raising lottery tool. Would people engage more with Twitter if they knew there was a small but real chance of getting a non-canned response from celebs?
          • Domenic_S 11y ago
            Exactly. Winning the lotto is essentially impossible as well, but millions still play because there's a (ever so small) non-zero chance they'll hit. This would basically be celeb lotto.
  • pimlottc 11y ago
    I think the real draw for following celebs on twitter is not that it isn't broadcast, but the idea that it's a more "unfiltered" broadcast; that it's more likely you're getting an off-the-cuff remark straight from the actual celebrity instead of a scripted press clipping from their PR flacks. At least, that's the illusion. And while there are plenty of "managed" accounts run by paid "ghost tweeters", there have also been enough embarrassing deleted tweets to show that at least some remarks are coming straight from the horse's mouth.
• stephengillie 11y ago
  Was there some trigger or cause for this? Did something happen over the weekend to change investor feelings?
  • boomshucka 11y ago
    quarterly results.
  • shepardrtc 11y ago
    A lot of tech companies are down right now. Twitter isn't the worst, but its a fun target for people.
    • itg 11y ago
      No, in fact there are also a number of tech companies up right now because they are showing growth. Meanwhile twitter has been flat. The investment community didn't decide to gather around and pick on twitter because it would be fun. edit: apparently people didn't take too kindly to pointing out that not all tech companies are having a downward trend. Here are tech companies that are up compared to one year ago: $FB, $GOOG, $MSFT, $AAPL, $AMZN
• shepardrtc 11y ago
  Last year around this time, Cramer was talking about how Twitter would hit $90 before the end of the year.
  • hyperbovine 11y ago
    "!cramer" has been a successful trading strategy of mine for over a decade.
  • onewaystreet 11y ago
    I don't know what Cramer was saying a year ago, but for the past few months he has been very negative on the company. He was one of the loudest people calling for Dick Costolo to resign.
• tinco 11y ago
  It's just the delusion of wall street. They expect hockey stick growth figures from a single product company that clearly already dominates their niche. Even though most people feel Twitter is declining, it's actually still growing. The graphic shows the twitter bird in a freefall, but what's actually happening is the public markets traders worst nightmare, the bird is just flying straight on.
  • onewaystreet 11y ago
    Twitter's user growth has been nearly flat. This is a fact. Whether this matters and whether Twitter can turn things around are different issues. Twitter's problem is that it went public as a growth company comparable to Facebook when it might just be a niche social network.
    • tokipin 11y ago
      I think part of the issue is that Twitter is a great tool for people in media/news as well as PR/celebrities etc, and because of the role these groups play in society they have been doing what amounts to a lot of free advertisement for Twitter. All along this may have been "artificially" increasing Twitter's user numbers relative to the kinds of users they want.
  • jgalt212 11y ago
    Twitter's valuation problem is that they sold Wall Street on a user growth story instead of revenue growth story. Had they done the latter, they stock price would be much less volatile and Dick Costolo would still have his job.
  • austenallred 11y ago
    They actually beat analyst expectations for revenue, but the sales pitch for a long time has been, "Revenue doesn't matter, because massive user growth!" That doesn't pan out so well when user growth is OK at best. The real problem is core to the product (it's really hard to become an active user), and one that's both really difficult and really time-consuming to solve.
  • 11y ago
• smegel 11y ago
  Well if a smartphone app called Yo got funding, why not Twitter?
• chollida1 11y ago
  https://news.ycombinator.com/item?id=9961314 https://news.ycombinator.com/item?id=9961314 https://news.ycombinator.com/item?id=9937778 https://news.ycombinator.com/item?id=9937778 I've been pretty negative on Twitter for a while. I just don't see what they offer to justify their valuation. They have an estimated P/E of 87 and yet they aren't growing. On the other hand their short interest is growing:( TweetDeck is awesome. Their real time news is awesome. Their main website is awful. It's like a worse myspace. Twitter, find a way to clean news data and deliver it to me in under a second identified with sentiment and stock ticker and I'll pay.
  • sagarun 11y ago
    I thought P/E is calculated for companies with a positive EPS. Twitter is loosing money. Not sure how you came up with P/E of 87.
    • chollida1 11y ago
      > I thought P/E is calculated for companies with a positive EPS. Twitter is loosing money. Not sure how you came up with P/E of 87. Short answer I got it from my bloomberg terminal. Long answer. P/E is different from estimated( or forward) P/E. See https://en.wikipedia.org/wiki/Price%E2%80%93earnings_ratio https://en.wikipedia.org/wiki/Price%E2%80%93earnings_ratio
      • deleted 11y ago
        [deleted]
    • chralieboy 11y ago
      You are technically correct. Silicon Valley uses P/E when calculating valuation/revenue, because startups are rarely profitable. They aren't equivalent in the same way that user growth and revenue growth are not equivalent to profit growth. A misinformed statistic for a misinformed view of how to build a successful business.
      • mohawk 11y ago
• staunch 11y ago
  Twitter needs multi-level threaded discussions and "sub-tweets" that are more than 140 characters. Right now Twitter is an exercise in frustration. It takes so much work to understand other peoples' views that few bother, leading to endless misunderstandings and fights. A miscommunication platform. #DescribeTwitterIn3Words
  • danielweber 11y ago
    That's part of the appeal. Twit something just before you go to bed, and find out that it got misheard and created a twitterstorm overnight and in the morning your boss says you are fired because someone figured out where you work and DDoSed your employer's network in retaliation. Usually you have to juggle chainsaws for a similar rush.
  • untog 11y ago
    The character limit is part of the usefulness in Twitter, for me - make your point. Be succinct. This is why I hate people doing things like tweetstorms.
    • jljljl 11y ago
      Character limit also means that the views that make good sound bites have a better chance of winning vs more nuanced views. Succinctness is good, but it isn't necessarily the same as 140 characters
    • bradleyland 11y ago
      Sometimes the character limit delivers on its promise. Other times, it's as useless as posting a 30 MPH (50 KPH) speed limit on a six-lane interstate highway.
  • pbreit 11y ago
    You do realize that the limited characters is perhaps the single most important feature in its success so far?
    • nkozyra 11y ago
• ibejoeb 11y ago
  Revenues are up. Losses are down. I might buy some discount Twitter...
  • jusben1369 11y ago
    You have to ask yourself what _drove_ that initial valuation that you're now being "cheaply" That initial valuation was driven by the belief that they would be aggressively adding new users. It wasn't based on them doing a great job of extracting a better profit from a fairly static install base.
    • ibejoeb 11y ago
      I agree. I understand wall street is looking for massive user growth. That seems to be a wild misunderstanding of what Twitter is, though. I'm in the same camp as a few other commenters. It seems that Twitter's value is really in being a broadcast platform for big names. I don't think there is a viable contender out there. That population is finite, and "followers" can be passive consumers. I'm not sure that there is going to be much growth in the user base, and I think that's a natural property of twitter. I think it's still valuable and can be relevant for quite a long time.
  • adventured 11y ago
    By comparison, Groupon has $3.19 billion in sales, and is valued at $3.17 billion. Why does Twitter deserve six or seven times the valuation that Groupon is getting? Especially given Twitter's user growth has fallen off a cliff. Of course they're in different segments, but financial results are all that matter ultimately. My opinion: they don't deserve the valuation, the market has realized it, and will continue to deflate their extreme valuation, eventually over-correcting due to negative sentiment. They're worth $5 to $10 billion today. On the bright side for Twitter, Google will probably buy them after their stock sinks further.
    • cft 11y ago
      That would be a big mistake for Google to buy them. Twitter was hyped by the media since it's used by the media, which led to its overvaluation. It is used surprisingly little by the ordinary masses.
• kumarm 11y ago
  Company that never made money, Priced at 12+ times Sales, little Growth. Stock falling? While companies are making real money, Twitter like companies are creating the Bubble chatter this time.
• anon3_ 11y ago
  Twitter may out of steam, but the days where being a machine fueled by runnaway hype IPO's are not going to go anywhere. I don't think twitter's discourse ever helped anyone, any group, or any society. Can someone brighten my day and tell me a way twitter has helped us, somehow?
  • jusben1369 11y ago
    Arab Spring (what happened post Arab Spring isn't on Twitter)
• cordite 11y ago
  What happens if a stock in a tech company goes down to low value? Do they owe money back to the brokers that made the IPO?
  • jusben1369 11y ago
    Nothing whatsoever happens. It's just the market doing its market thing.
    • nicksergeant 11y ago
      Not necessarily true - if the value gets low enough it'll get the boot from the NYSE.
      • cordite 11y ago
        But what does that mean to the company and its employees? I bring this up because of the stock market crash having such ridiculous effects from the great depression era. Though I may just be uneducated on what really happened.
        • prewett 11y ago
          The stock price need not matter at all to the company; the stock price is completely independent of the company. Once the shares are sold, the company no longer owns them, so whatever happens, happens, just like whenever you sell anything else. If a farmer sells some corn, and the price drops drastically afterwards, it makes no difference to the farmer. However, the owners of the company might get together and force the board of directors to do something, like fire the CEO. The CEO, who probably has a lot of compensation as stock or options, would like price to be higher, so he is likely to take actions to get the stock price higher. Such actions may or may not be wise, and may or may not be helpful for the company. Frequently they aren't...
          • code4tee 11y ago
            "The stock price need not matter at all to the company" Tell that to the employees holding options. Those options are likely worthless if the stock price goes down.
• jusben1369 11y ago
  Now if you were Jack and you were semi-entertaining trying to be co-CEO do you think events post earnings would absolutely put the nail in the coffin in your mind of being Twitter CEO? I have to believe you'd be like "Who wants this job?!" realizing just how far and long the road ahead is. They're basically Yahoo now with a strong core base of users but little growth prospects.
• coldcode 11y ago
  It's not a business, it never was worth even the IPO value. You are trying to make a business out of 140 character text messages which is pretty silly.
• code4tee 11y ago
  ...and there's really nothing stopping it from falling much much more. There's really no justification for the value placed on this company--or many other tech companies that have interesting offerings but haven't actually managed to create a real business. TWTR will likely be marked as a turning point for the 'tech bubble 2.0' when tech companies get put in two camps. Those that are real business and those that are not. I don't think we're in a 1999-esque tech bubble but there are a lot of hyped up companies that aren't real businesses that need to get washed out of the system.
  • austenallred 11y ago
    So a company that does $2B/year in revenue isn't a real business? Overvalued, maybe. But that's real cash.
    • anotherangrydev 11y ago
      Yeah, but it took them many years and massive leverage to achieve that. Also, revenue != profit. As of today, they are drowning in debt, there doesn't seem to be a strategy for turning things around and now investors don't even believe in them. Twitter's going down :(
      • boomshucka 11y ago
        Massive leverage? Can you not read a balance sheet? They aren't drowning in debt. They have negative net debt.
        • anotherangrydev 11y ago
          I haven't take a look at their last quarter report but I don't think their situation changed from: http://www.wsj.com/articles/twitter-debt-rated-as-junk-1415911602 http://www.wsj.com/articles/twitter-debt-rated-as-junk-14159... to a healthy one in less than a year. Can you please provide a link to the balance sheet you saw?
• iask 11y ago
  Do we need better initial valuation standards?
• blakeja 11y ago
  Wasn't there some speculation that twitter itself had some bots auto-generating fake users, sending fake tweets, etc? Even if they are not doing it, others certainly are for various reasons. I have always wondered what the true user count is.
• sandworm101 11y ago
  Twitter hasn't done anything wrong. They didn't drive the price up. Twitter doesn't set its stock price, at least not after the IPO. From that day it was in the hands of investors. They drove up the price. They should only blame themselves when it falls back.
• vegabook 11y ago
  This stock appears to be the high-beta canary-in-the-coalmine for the rest of tech. Tech in general has been cut a lot of slack in the past 10 years by the market. Anyone with a dream and a disruption pitch was given the benefit of the doubt. Now the sector is having to compete like the rust belt. If you've got a flaw in your management, your busines plan, your execution, or you have a gap in your barriers to entry, you're being punished like the rest of 'em. Twitter Exhibit A. It has screwed up on monetization, too free for too long, too many hesitant initiatives, not enough killer instinct ("not enough Zuck", or if you like, "not enough Bill Gates"). It's the weak giant being taken down, SOTC-style. It's 2015's Lotus Development Inc. But it's not alone: AAPL stock performance is also being cut no mercy here on even a minor shipments hiccup. AAPL is looking IBM-circa-1990. At that time IBM was the only non-oil company in the Fortune 500 top-5. It doesn't help that Chinese demand is tanking - the tech waterline is going downwards and the shipwrecks are starting to show.
• pitchups 11y ago
  The reason both Twitter and Google+ are struggling to grow their user base, IMO is because many folks I have talked to - find both products difficult to understand and use. Surprisingly most normal folks don't really get what "follow" means, and the slightly arcane terminology of twitter. The learning curve is a bit steep - and most users sign up, hang around for a while, don't really invest in discovering and following the right people, and soon just give up and never come back. The same is true for G+ - as in both cases your experience is defined by who you follow. Facebook got this right - as the simple concept of a "Friend" request translates perfectly to the real-world analog of making friends. While Follow is an abstract, invented concept with no real-world analog. That together with the torrent of noise and information on Twitter, and no good tools to filter and manage the feed efficiently, make Twitter a tough product to use even for experienced users. I personally love Tweetdeck - and have managed to tame the newsfeed with lists etc - but it is still tiresome and inefficient.
  • otis_inf 11y ago
    > Surprisingly most normal folks don't really get what "follow" means, and the slightly arcane terminology of twitter. The learning curve is a bit steep - and most users sign up, hang around for a while, don't really invest in discovering and following the right people, and soon just give up and never come back. Question, do these people who find it hard to grasp how twitter works have facebook accounts? As facebook is way more complicated than twitter is (which is just a textbox, a submit button and that's basically it).
    • pitchups 11y ago
      Yes, every one of these folks - mostly friends and family - has a Facebook account and are active users of Facebook. It is not the simplicity of having a textbox and a submit button that matters in this case - they all know how to post a tweet. It is that once they do that - nothing happens. In FB - a post often immediately gets a reaction - a like or a comment - even if they have only a few friends. The stuff you post on FB is not as transient - while your Tweet most likely disappeared in a few seconds from the timeline of your followers.
    • 11y ago
• rgejman 11y ago
  I predict that Twitter revenue will grow as iOS 9 is released. iOS 9 will cause mobile advertising to undergo a paradigm shift as app-centered advertising becomes more important than website-based advertising. This will lead to increased ad dollar spending on Twitter.
• otis_inf 11y ago
  IMHO a lot of people stop with twitter because they don't get the right social circle going: they follow a bunch of people but don't gain much followers and who they gain aren't really engaging in any activity, so it feels as if they're posting text in a document they store on their own computer: no-one really sees it nor cares. Twitter has the downside that it's really 'in the moment': stuff that's tweeted now is interesting now, not tomorrow. This gives a problem with people who open twitter occasionally: they're likely not on twitter when something happens IRL and everyone's tweeting about it. With Facebook this is different, as things aren't really 'in the moment', or at least aren't depending on that that much: it's perfectly fine to read someone's post 2 days after it's been posted.
• blizkreeg 11y ago
  The whole point of Twitter is to know what's going on in the world of people and things you're interested in, BUT, and perhaps more importantly, IMHO foster conversation. The latter is completely opaque to someone who is new to the service. Conversation threads are buried under a click/touch and even then, it's hard to parse it. I think the best thing Twitter could do is to downplay the importance of favorites and retweets (though they are important for growth but are a proxy for ego boost for the average user and not easy unless you're popular or important), and make the replies and conversations to a tweet/news story more prominent and "always-on" (with some limit of course, lest you see 500 replies to a Britney Spears tweet -- but then again, if you're following someone like that, may be you want to know what people are saying about it). Engage more people in the conversation and surface it better. New users will have a much better grasp on what Twitter is if they do this. My 2c.
  • MrBuddyCasino 11y ago
    Fully agree - it took me a while to figure out "conversations" on Twitter, its very un-intuitive.
    • glomph 11y ago
      Honestly I still don't understand them. They are not always in chronological order and their seems to be no logic behind the way tweets are grouped.
• dimbirol 11y ago
  One thing I've noticed with celebrity accounts: an increasing amount of tweets is just a link to a new instagram post. A tweet gets maybe a few likes and retweets, but the linked instagram post has 500 likes & 25 comments within 30 minutes. That's quite alarming! e.g: https://twitter.com/taylorswift13/status/626084866631667712 https://twitter.com/taylorswift13/status/626084866631667712 18k likes on twitter, 866k likes on instagram. let these numbers do the talking.
• jameslk 11y ago
  I'm surprised Twitter's stock has floated as long as it has. While Facebook has diversified into different, successful, products and platforms, Twitter has stagnated, fumbled around and underwhelmed. Much like Yahoo. Perhaps I'm just a bit cynical and biased against Twitter though. I find the mostly arbitrary 140 char limit, 6 second video communication concepts a cute gimmick that will eventually tire. I wouldn't be surprised when the tech bubble bursts, these social media experiments will be the first to fall back to earth. Any significant slashing of advertising budgets (due to e.g. macro economic affairs) will seriously strain the revenue model (and investor patience) of these services.
  • marquis 11y ago
    YMMV? I have much more business engagement on Twitter than Facebook. FB could disappear tomorrow for all my business cared, but I would certainly notice Twitter not being around.
• uptown 11y ago
  Part of Twitter's problem is a mismatch between people who hold the largest megaphones compared to people they need to stick-around if their user growth is to continue. People with millions of followers probably don't need to interact with any of them, but will maintain or grow their follower count through whatever celebrity got them their original following. They'll likely get retweets and replies to virtually everything they post - but may not even read any of it. On the other side of the spectrum, people just starting out on the platform probably have few or no followers, nor are they likely to immediately find the people posting about content they want to follow. It's like walking into a party where everybody is already 3 or 4 beers deep and trying to join the conversation. Twitter seems to think the answer to this problem is to encourage you to follow Barack Obama or Katy Perry, which seems like a really stupid suggestion if you're trying to show a new user that they can use their platform to establish networks of people interested in similar things that keep you coming back. Most users will never get any personal reply from either Barack Obama or Katy Perry ... so maybe Twitter should research how to push new users towards people more-likely to reply. Once you find people you can corespond with on their platform, it establishes a natural hook to encourage you to return. By lining up virtual "nobodies" with the most famous celebrities on the planet they're setting new users up for disappointment unless those users invest time finding the right people to interact with.
  • Yhippa 11y ago
    Another thing I'm thinking of is how authentic are the users? Is Katy Perry really Katy Perry or is she a team of ghost writers? That really turns me off about Twitter. Likewise I'm very impressed when the actual account owners tweet but who knows, It still might not be them. As for new user onboarding one thing that I think could work is if you get them to start searching for interests through their search functionality. That's how I found a lot of interesting accounts.
    • uptown 11y ago
      Twitter purports to be an advertising company. Can't they use some of that retargeting tech to suggest potentially interesting users to follow rather than sell stuff?
• drivingmenuts 11y ago
  And here's me still trying to figure out what the hell it's good for ...