Did you hear the news? The Twitter (TWTR) turnaround has begun!
Or at least that’s what it seemed like yesterday. Today it’s back to reality.
Shares of TWTR stock gained more than 3% Wednesday on reports that the social media company is building a product which would expand the character limit on Twitter posts.
According to sources from Re/code, the in-the-works product would break beyond the usual 140-character limit and “enable Twitter users to publish long-form content to the service.”
For those living under a rock, Twitter stock does indeed need some kind of change. Disappointing user growth in the most recent quarter raised questions about Twitter’s audience and how to grow it … and the stock has been struggling as a result.
I’m hardly convinced that “long form” — considering the mainstream attention span and the already-crowded media space — is going to win over the masses, though. I guess writing tight is harder than rambling — and this post is probably proof.
Then again, “long form” is a relative description anyway. Just about everything is long form compared to 140 characters.
TWTR Stock Needs More to Succeed
But TWTR stock investors were applauding anyway — at least until today. Yesterday’s jump was especially head scratching considering the fact that building new products is already the backbone of countless tech companies — they’re known for funneling revenue towards R&D spending and creative new projects at the expense of near-term profits.
Kurt Wagner and Jason Del Rey at Re/code nod to this, writing: “As with all early products, there’s a chance the long-form feature may never make it to consumers.”
The only thing that does indeed set TWTR’s new product apart dramatically from other tech experiments is that fact that it would change Twitter’s defining quality — the reason Re/code also calls it a “a bold stance” from interim (and apparently soon-to-be permanent) CEO Jack Dorsey.
But bold stances are only needed in desperate times. It’s like a girl who dyes her hair a bright shade right after a break-up.
The fact that Twitter is this desperate — and that grasping at a completely different straw is seen as promising — merely showcases how lost the social media site is and how hard it is to bridge the gap between a valuable service and a profitable, growing business model.
Investors seem more tuned into this reality today, with TWTR stock off an ugly 7% on the CEO news.
Jeff Reeves of InvestorPlace talked about this last month, saying that a CEO appointment wouldn’t be enough to offset the company’s woes. One stat that stood out: In the most recent quarter, Twitter revenue was up 61%, but its expenses were up 68%.
As he put it, “That’s not a recipe for sustainable growth.”
Bottom Line
Dorsey being made the official head honcho isn’t going to change that — and it seems unlikely that the impact of an extended character limit will either.
TWTR stock will likely get moved around a good bit after its next earning report, which is slated for late October.
As an investor, I recommend watching the show from the sidelines.
Alyssa Oursler is based in San Francisco and writes about technology, investing, gender and entrepreneurship. Her work has appeared on Forbes, Business Insider, MSN Money and more. You can follow her on Twitter here or check out her personal site here. As of this writing, she did not hold a position in any of the aforementioned securities.
