Twitter Inc (NYSE:TWTR) runs a service that wastes the time of celebrities, and journalists, by offering tantalizing glimpses into what often turn out to be nothing burgers. The same can be said for TWTR stock.
For all the rage and angst that analysts pour into shares, they’ve gone nowhere. TWTR is a half-dollar away from where it was a year ago. The company is not growing, and it’s no closer to a profit than it ever was.
The earnings “whisper” for the second quarter, to be announced July 27, is for a loss of 12 cents per share on revenue of $558.8 million. This compares with a loss of 15 cents per share on $601.96 million in revenue for the same quarter a year ago.
Why are investors wasting their time in TWTR stock?
For the same reason journalists are wasting time with Trump’s tweets.
All Sizzle, No Steak
Twitter is what it is — a money-losing micro-blogging site used by celebrities to tease their audiences, and used by audiences to pretend they’re celebrities.
For all the excitement over live streaming, with Twitter now competing with other social sites for news highlights, the company remains stuck in neutral.
InvestorPlace writers are divided on Twitter stock, based on their own buying horizons or trading strategies. Bret Kenwell calls it a buy, but on a pullback. Nicholas Chahine calls it profitable to trade. Luke Lango sees it as doing great, but not for long.
I don’t disagree with any of that.
But that last opinion is the real key for the readers I covet — longer-term investors seeking stocks they can hold for three to five years with reasonable hope of an above-average profit. Reading technical charts for a quick in-and-out gives me a headache.
True, Twitter has proven good at managing expectations. It usually beats earnings estimates and TWTR stock runs a bit after earnings, as the good people at Zacks noted for us recently.
But that’s not a game I like to play.
Going Nowhere Fast
Twitter, the company, is going nowhere fast. The leading Twitterati, like new CEO Ned Segal, are making coin. His 794,000-share signing bonus is reportedly worth $15 million.
But you’re not making money on TWTR, unless you can get in-and-out quickly or Segal can manage to find multiple buyers for the company. Two big companies, both anxious to own Twitter, could end up in profitable arbitrage.
The fact is, Twitter has reached its limit based on its current business model, and operational stance. It is an application that rents cloud space. It is a service that meets some needs, but those needs are met.
If Twitter could go beyond itself — whether by helping hawk celebrities’ tickets or helping in peer-to-peer meetings in meat space, like the last decade’s Meet-Ups, as Weibo Corp (ADR) (NASDAQ:WB) does in China — that could be interesting. Selling the whole company to Weibo, whose stock is up 146% for the last year while Twitter is sitting on a 3% gain, might also be interesting. A bid might at least get the arbitrageur juices flowing.
Bottom Line on TWTR Stock
But its present management team of CEO Jack Dorsey and COO Anthony Notto have had ample time to fix the company, since the stock peaked at $69 per share in early 2014. The early optimism has faded, and I suspect the early optimists have thrown in their hands and taken their losses.
The long-term Twitter stock chart looks like nothing so much as a summer water slide, and its present position looks like the end of the ride.
It is, as Trump might tweet, sad!
Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing, he did not hold a position in any of the aforementioned securities.
