Twitter (TWTR) Stock: Losses Are Far From Over

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Twitter Inc (NYSE: TWTR)

Twitter has had an incredibly rough time throughout the year 2015. While some believe that the worst is over, I beg to differ. In fact, I believe that the worst is far from over. Today, we’ll talk about why TWTR struggled throughout the year 2015 and why I believe that the hard times for the stock are far from over.

Why Twitter Has Had Such A Rough Time Throughout The Year 2015

Understanding why Twitter has had such a rough time throughout the year 2015 is relatively simple. Twitter is a social network. This means that the company’s growth is driven by active users. However, in 2014, the company started to struggle with regard to bringing new users into the network. Throughout the year 2015, growth in monthly active users on TWTR has been lackluster to say the least. In fact, this is the reason that Jack Dorsey is now the CEO of the company.

In early 2015, Dick Costolo was under pressure from investors. Ultimately, investors wanted to see user data climb or they wanted to see Costolo resign as CEO. After the first quarter, Costolo simply couldn’t get user growth under control. So, he resigned from his post, leaving co-founder Jack Dorsey in the place as interim CEO.

For quite a while, Jack Dorsey acted as the interim CEO of the company while TWTR worked to find a CEO that would take Costolo’s place. However, after several months, TWTR simply couldn’t find anyone new to take the position. As a result, Jack Dorsey decided to step up and take the long-term role as CEO of the company.

Why TWTR’s Struggles Are Far From Over

When Jack Dorsey took on the position as the permanent CEO of Twitter, many investors were happy. In fact, we saw vast gains in the stock as a result. However, since, the stock has fallen on more hard times, and those hard times are far from over. Here’s why…

  • User Problems Are Far From Over – First and foremost, the original problem that Twitter had was the fact that it simply couldn’t get new users to come in and remain as active users. Unfortunately, that problem has yet to be solved. While the company has worked hard to improve the experience for advertisers, they have done very little to improve the user experience. As a result, the company has recently made announcements stating that we can’t expect the new users issue to go away any time soon. Ultimately, while better advertising options may drive more revenue in the short term, the company is going to have a big problem with growth in the long term if they can’t get the user problem under control.
  • Jack Dorsey Is Not A Fit CEO – You may remember several years ago that Jack Dorsey was the CEO of TWTR. Unfortunately, he simply couldn’t hold onto the position. Dorsey was too interested in extracurricular activities and not interested enough in the growth of TWTR. While as he is a bit older, he may be a better CEO this time, he simply doesn’t have the time. The reality here is that Dorsey is the CEO of Square as well, a newly public company. Being the CEO of a company that’s struggling is a very time consuming process. Also, being the CEO of a publicly traded company is very time consuming. Between the two, Dorsey simply doesn’t have the adequate time to focus on either one!

Ultimately, for these reasons, I’m not expecting to see anything great out of TWTR moving forward. The company needs a CEO that is going to focus on the issues at hand. Unfortunately, Dorsey isn’t that CEO.

What Do You Think?

Where do you think TWTR is headed and why? Let us know your opinion in the comments below!

[Image Courtesy of Wikipedia]

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Hey, Im Joshua, the founder of CNA Finance. I enjoy following the trends in the market and finding the catalysts that are making the moves. If you want to get in contact with me, leave a comment below or email me at CNAFinanceHelp@gmail.com Please keep in mind that I am not an investment advisor and nor is CNA Finance. This is a news and information gathering outlet. We may work directly with some of the companies that we write about. If we have a business relationship with an issuer, we will mention that in the articles. We also have various affiliate relationships with advertisers and may be paid if you sign up for a service that you were referred to through our website.

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