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I wouldn't call it a delusion. Investors were valuing Twitter at close to $40 Billion because they were expecting Facebook-like growth. Now that they don't see

by thetrb 11y ago

I wouldn't call it a delusion. Investors were valuing Twitter at close to $40 Billion because they were expecting Facebook-like growth. Now that they don't see that growth they currently value it at around $20 Billion. Based on simple things like P/E that's still a good number. I still think there's a good chance of a turnaround for Twitter. It's widely used by the media and celebrities. If they come up with a better way to consume this then I think they have a good chance of getting back to their recent highs in their stock.

theseatoms 11y ago
I agree. It's the opposite of delusion, quite grounded in reality. And I agree with your second point. Their current level of network effect / lock-in should give them plenty of runway to find new ways to grow and/or monetize.
- boomzilla 11y ago
  I am not so sure. They actually have negative earning, GAAP-wise, caused by a huge amount of stock based compensation and acquisition costs. Even with all these spending, Twitter is not showing any growth. Twitter will lose more engineering and product talents as the stock price goes down. They can't also use stock to acquire growth either. It's a dead spiral. Twitter has been leveraging Wall street goodwill and hype but I think it's the start of the end.
  - theseatoms 11y ago
    I wasn't aware of the extent of stock compensation costs, but I do realize that they haven't turned a profit. You don't deny the power of the platform, network, and brand themselves, right? I forget the buzzword for this type of non-fungible, unique asset. I guess we just wait and see what sort of valuation it fetches in an acquisition.
    - boomzilla 11y ago
      No I am not denying the value of the brand and the network, but I don't know how to valuate these assets. I don't see how they are worth 20B, but maybe some others do. In terms of the engineering platform, I am quite confident a similar platform can be built with much less than 1B. Twitter platform is not that special in terms of engineering challenges.
AJ007 11y ago
One plausible risk scenario is, under pressure, they try make significant changes without incremental testing. I don't see a good alternative channel to Twitter right now. Facebook certainly isn't it. Instagram definitely sliced out some of Twitter's market, but can't do the same in other use cases. Neither can Snapchat. From the standpoint outgoing traffic Facebook dominates Twitter. That is a concern. Fake traffic or real, this is a signal of engagement. Another problem is ad platform dominance. Advertisers will spend on well built platforms with large audiences. Google and Facebook clearly excel in this area now. It isn't so much Google & Facebook that threaten Twitter but all the other social apps and sites which are banking on the exact same model to justify their valuations. If Twitter is earning 1/3rd or 1/4th of the amount per user Facebook is in the long term this could be a problem. There is a price where Twitter becomes a very strong acquisition target. It certainly is heading in that direction.
- teaneedz 11y ago
  Recent product changes have led me to use Twitter less. Twitter's official app UX is a mottled mess. I stalk the feed from 3rd part clients for news and product updates, but contribute less of me. Ello now gets my views and posts. I even have a final goodbye tweet on standby just waiting for the next Facebookification decision out of Twitter. I'm pretty sure other power users have been changing their usage patterns too just from personal observation.

by thetrb 11y ago

theseatoms 11y ago

I agree. It's the opposite of delusion, quite grounded in reality. And I agree with your second point. Their current level of network effect / lock-in should give them plenty of runway to find new ways to grow and/or monetize.

boomzilla 11y ago
I am not so sure. They actually have negative earning, GAAP-wise, caused by a huge amount of stock based compensation and acquisition costs. Even with all these spending, Twitter is not showing any growth. Twitter will lose more engineering and product talents as the stock price goes down. They can't also use stock to acquire growth either. It's a dead spiral. Twitter has been leveraging Wall street goodwill and hype but I think it's the start of the end.
- theseatoms 11y ago
  I wasn't aware of the extent of stock compensation costs, but I do realize that they haven't turned a profit. You don't deny the power of the platform, network, and brand themselves, right? I forget the buzzword for this type of non-fungible, unique asset. I guess we just wait and see what sort of valuation it fetches in an acquisition.
  - boomzilla 11y ago
    No I am not denying the value of the brand and the network, but I don't know how to valuate these assets. I don't see how they are worth 20B, but maybe some others do. In terms of the engineering platform, I am quite confident a similar platform can be built with much less than 1B. Twitter platform is not that special in terms of engineering challenges.

AJ007 11y ago

One plausible risk scenario is, under pressure, they try make significant changes without incremental testing. I don't see a good alternative channel to Twitter right now. Facebook certainly isn't it. Instagram definitely sliced out some of Twitter's market, but can't do the same in other use cases. Neither can Snapchat. From the standpoint outgoing traffic Facebook dominates Twitter. That is a concern. Fake traffic or real, this is a signal of engagement. Another problem is ad platform dominance. Advertisers will spend on well built platforms with large audiences. Google and Facebook clearly excel in this area now. It isn't so much Google & Facebook that threaten Twitter but all the other social apps and sites which are banking on the exact same model to justify their valuations. If Twitter is earning 1/3rd or 1/4th of the amount per user Facebook is in the long term this could be a problem. There is a price where Twitter becomes a very strong acquisition target. It certainly is heading in that direction.

teaneedz 11y ago
Recent product changes have led me to use Twitter less. Twitter's official app UX is a mottled mess. I stalk the feed from 3rd part clients for news and product updates, but contribute less of me. Ello now gets my views and posts. I even have a final goodbye tweet on standby just waiting for the next Facebookification decision out of Twitter. I'm pretty sure other power users have been changing their usage patterns too just from personal observation.