Twitter Inc (NYSE: TWTR)
Twitter has been on a strong downtrend for quite some time now, and for good reason. The company simply can’t seem to bring new users in and maintain them on the network as regular users. This is a problem that has been in place for a while now. In fact, last year, when the stock was trading at over $20 per share, I predicted that it would fall below $15 per share. Now, it’s sitting under $15 and looking for more declines. However, is there a bottom? In my opinion, TWTR will likely bottom around $10 per share, and it’s getting close! Today, we’ll talk about why the stock has been struggling, and why I see a bottom at $10 per share. So, let’s get right to it…
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Why TWTR Has Had Such A Rough Time
As mentioned above, Twitter has been struggling in the market as the result of a fundamental lack of ability to bring new users into the network. This is a problem that the company has been facing for quite some time. In fact, early last year, Dick Costolo, the CEO at TWTR, resigned under pressure from investors because he simply couldn’t seem to drive the users in.
When Costolo resigned, Co-Founder Jack Dorsey took control of the company. At this time, investors were pushing for Dorsey to take the long-term CEO position, especially since TWTR couldn’t seem to find anyone else to take the position. Nonetheless, this was an overwhelmingly poor move. The reality is that while Dorsey is one of the co-founders of Twitter, he’s not a great CEO. In fact, he held the position as CEO of Twitter years ago, and was promptly fired when it became clear that his focus wasn’t there!
Now, we’re seeing more of the same. Dorsey is, indeed, the CEO of the company, and the company continues to struggle. While we’ve seen several changes to TWTR that benefit advertisers, we’ve seen nothing of the sort that benefits users. In fact, the social network simply isn’t user friendly.
While some would argue that Twitter’s problems have to do with visibility and marketing, I beg to differ. The truth is that everyone I know, and likely everyone you know, has heard of TWTR. In fact, the vast majority have probably tried to use the social network. Nonetheless, when compared to other social networks, TWTR is relatively hard to understand. It’s not easy to navigate, it doesn’t invite users with its design, and the limitations that the social network has are absurd! However, regardless of these issues, no one at Twitter seems to be willing to make any meaningful changes.
Why I See The Bottom At Or Around $10 Per Share
Twitter is a company that has problems, there’s no denying that. The user-growth problem is persistent, and will likely remain that way until the company decides to embark on a big adventure – revamping the social network. However, it’s also important to keep in mind that the social network isn’t exactly useless either. There is something to be said about a website that is able to drag in millions-upon-millions of faithful users on a monthly basis. The truth is that, thanks to changes that TWTR made for advertisers, the company is driving quite a bit of revenue, and that has value for investors. While there are risks in expecting to see growth in users any time soon, strong revenue and a history of earning more than analysts expect to see will likely keep solid support under the stock. While I do see it falling to $10, and possibly a little further, we’re not likely to see much below this point.
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What Do You Think?
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