Twitter Inc (NYSE:TWTR) is once again in the news, and once again it’s not for the right reasons. The social media company’s top execs are quitting, Re/code reported on Sunday.
That means that after all that wandering in the wilderness for TWTR stock last year as it searched for a new CEO, it is back to the same old power vacuum.
In fact, things may be worse now, as CEO Jack Dorsey is just a part-time leader splitting his time between a troubled Twitter and IPO hopeful Square Inc. While Dorsey is a co-founder of Twitter, the biggest challenges for TWTR stock have been profitability and slowing user growth — new challenges that demand new vision.
And the fact that Twitter’s product head essentially quit without another job lined up is a pretty damning assessment of the company’s chances at addressing that problem.
TWTR Stock – A Bloodbath
Unsurprisingly, Twitter Inc stock is off about 4% after the opening bell today. That makes it an ugly 23% loss already in 2016 for TWTR, and a crash of almost 70% from its highs last spring.
At every turn, bottom fishers have been telling themselves it can’t get any worse. But Twitter remains unprofitable (by GAAP measures, at least). And while revenue is theoretically predicted to rise 40% in FY2015, the company still trades for more than 3 times future sales even after its crash and burn.
Worse, user growth has literally plateaued with quarter-over-quarter expansion of just 1% in Twitter’s Q3 report last October. And if we see the company’s first sequential decline in users this quarter when earnings hit in the beginning of February? Well, look out below.
There is plenty of talk about a white knight like Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) riding in and purchasing Twitter outright. However, Alphabet has made strides toward operating like a “real” company in the past year, including a restructuring (and name change from the old Google moniker) that means it will operate as a conglomerate with subsidiaries it expects to be self-sufficient.
Why in the world would money-losing Twitter fit in with that mission?
The sad reality is that Twitter is not an attractive buyout target … and judging by the recent executive departures, it also appears that TWTR isn’t a particularly attractive place to work right now, either.
Look, I love using Twitter as an information filter. And I believe the technology will stick around in some form, because there is a lot of social value to the tool.
As for tangible value for investors, however, I have serious doubts. And I don’t blame the higher-ups who just jumped ship rather than try to figure out what’s next for TWTR stock amid an increasingly challenging environment for the company.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.
