Twitter (TWTR) Stock: Failure Is Getting More Costly

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Twitter Inc (NYSE: TWTR)

Twitter has had a rough go in the market for the majority of the time that it has been traded publicly. Recently, we’ve seen a push upward as the company finally started working on its user-growth problem, but, all in all, things still aren’t looking good. Now, things are going from bad to worse as the company has not only failed itself, but according to a recent lawsuit, it has failed investors. Today, we’ll talk about the lawsuit, how the stock reacted to the news, and what we can expect to see from TWTR moving forward.

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TWTR Is Getting Sued For Failing!

As mentioned above, Twitter is having a rough day in the market today, as insult has been added to injury. Not only is the company failing to attract new users to generate strong revenue and earnings, but they are now being sued for their failure.

In a recent article on Bloomberg, we learned that a TWTR shareholder by the name of Doris Shenwick is taking the company to court. She believes that the company’s executives misled investors when it comes to growth prospects, and she wants the company to pay for her losses. Here’s a key snippet from the Bloomberg post explaining the lawsuit:

Shareholder Doris Shenwick claims Twitter executives misled investors on its growth prospects in November 2014, promising an increase in monthly active users to 550 million in the “intermediate” term and more than a billion in the “longer term.” The company failed to deliver on either estimate and concealed that it had no basis for those projections, the company said. As of June 30, the company had 313 million monthly active users, according to its website.”

What We’re Seeing In The Market

One of the first things we learn when we get started in the market is that it’s important to watch the news. After all, the news causes movement. When positive news is released with regard to a publicly-traded company, we can expect to see gains in the value of the stock as a result. However, the news that was released today surrounding TWTR was anything but positive. As a result of the overwhelmingly negative news, we’re seeing declines in the value of the stock today. Currently (1:00), the stock is trading at $18.37 per share after a loss of $0.73 per share or (3.85%) thus far.

What We Can Expect To See Moving Forward

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First and foremost, while the lawsuit is bad news, I’m not expecting this to result in much that we need to be concerned with – at least not at this juncture in time. Nonetheless, when it comes to Twitter, I have a relatively bearish opinion of what we can expect to see from the stock. At the end of the day, while the lawsuit isn’t likely to lead to anything substantially bad for the company, it does underline the true issue here. Throughout its history as a publicly-traded company, TWTR has struggled to bring new users in and retain them as regular users of the social network. While the company has made some attempts to fix the problem, they have failed miserably in the process. At the moment, the company is looking to streaming content as a way to save what they have left. While this may lead to short-term upward movement, I don’t think it’s going to solve the larger issue, nor do I think that the plan will actually work to bring the masses to the social network. All in all, the outlook for TWTR is relatively grim, in my opinion.

[Image Courtesy of Flickr]

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