TWTR: Why Twitter Stock Just Became a Laughing Stock

So far this year, Twitter (TWTR) has been trending … well, mostly downward. As you can see in the chart below, shares of Twitter stock have plummeted almost 42% since the start of 2014. They hit a high just under $70 early in the year, but closed at nearly $37 last Friday.

Meanwhile, social media rival Facebook (FB) boasts a user base about five times larger than Twitter … and gains that simply blow Twitter out of the water. Shares of FB stock have improved by around 25%, more than tripling the gains of the broader market.


Twitter stock investors are unsurprisingly getting a bit sick of this comparison, but luckily, they’ll have a little more to believe in when TWTR’s next earnings report rolls around. News broke a couple of days ago that the company plans to unveil as many as four new metrics in the July 29 second-quarter report that will show its reach is larger than its 255 million logged-in users.

One facet of this expanded reach is all the articles that take a tweet and embed it, like so:

It also will likely include tweets that show up on TV, for example. But then again … “users” reached in both these examples also don’t see the ads that actually make Twitter any money.

Regardless, the aim is painfully obvious: “to show Twitter isn’t just a diminutive Facebook,” as The Wall Street Journal summed it up. But the methodology — inventing new metrics — has a lot of experts shaking their heads. A few headlines to that end:

To take it a step further, Zachary Seward also notes in the Quartz article that: “invented metrics leave little room for comparison and contextThey give Twitter too much latitude to pick data that make it look best and ignore less flattering measurements.”

He then adds: “In another sense, this points to the problem with going public: At a crucial moment in Twitter’s evolution, it is focused on making the company look better to investors, rather than simply making its service work better for users.”

Still, it seems unlikely that Twitter stock investors will be fooled by this new metrics game in a couple of weeks — especially given the high-profile giggles in reaction.

And even if Twitter stock investors were fooled for a second, shares have a long way to go just to regain their 2014 losses. Remember: After the company’s last earnings report showed unimpressive user growth, TWTR stock plunged 10%.

Keep an eye out on July 29 to see if a few new metrics prompt at least a slightly better earnings reaction … but don’t hold your breath.

As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.

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