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Twitter Inc (TWTR): What’s Wrong With Twitter Stock? Ask Ex-Users!

TWTR stock can't get out from underneath this problem because the fixes make things even worse

Being a writer, I’ve prided myself on at least occasionally making a smashing point with the perfect selection of words in a clever way. And, being a former analyst and forward-thinker, I knew it was only a matter of time before Twitter Inc (TWTR) dished out a bowlful of pain to owners of Twitter stock.

Specifically, as far back as early 2014, I observed of the microblogging platform that “it’s just not all that interesting for very long.”

What's Wrong With Twitter Stock? These Ex-Users Make it Clear.The nearly 60% dip from TWTR stock since then has largely validated my concern.

But, being one to give credit where it’s due, I’ll concede that California wine marketer Ann Feely may have inadvertently described Twitter’s marketability problem far more elegantly than I ever could when she recently noted “I have no idea why I need to share my life with potentially however many followers you get,” and followed that by querying “How do I get followers?”

The fact that nobody at Twitter has yet to sufficiently address Feely’s concern may in itself be the red flag that haunts owners of Twitter stock more than any other.

Not Enough People “Get It”

Feely’s comments were just part of a collection of comments gathered by global news venue The Guardian, which spoke with a few dozen former and wanna-be TWTR users to determine why they quit using the platform, or why they never got started in the first place.

While the explanations were varied, they all ultimately said the same thing — it was never really clear how they were supposed to get involved with Twitter (other than to argue with someone about something another user had posted).

But what about keeping up with friends and relatives, which 1.1 billion users of rival Facebook Inc (FB) faithfully do every single day? Again, users just don’t get it, and it’s finally become a palpable problem. Last quarter, Twitter’s total user base didn’t grow one iota, rolling in at the same 320 million the company reported for Q3. In fact, taking out the text-message-only crowd, the headcount of active users slumped from 307 million users to only 305 million.

And that was after a concerted effort to grow its crowd.

Is TWTR Unfixable?

Fans and owners of TWTR stock will be quick to point out that CEO Jack Dorsey unveiled a powerful (sounding) five-point plan to fix Twitter and its ailing numbers.

Maybe it will help. But it probably won’t.

Kudos to Jack Dorsey for doing something; it would have been easy to keep doing more of the same. But, just for the sake of argument, is it possible the changes he’s directed and the overhaul he has in mind are going to make the social networking platform even less marketable than it is already? Consumers are slow to change, particularly when they’ve become accustomed to something.

It’s a valid concern. After all, Twitter had a “plan” as far back as 2010. A new advertising and marketing “plan” was put into place heading into 2012. Former CEO Dick Costola had a new “plan” in 2014. All of them loosely coincided with more users and more revenue, but none of them lived up to their hype, and none of them stopped the company’s across-the-board deceleration. Why would Dorsey’s new five-point plan (which, by the way, reads more like a list of goals or tasks than like an actual plan) achieve a different outcome?

Answer: It’s not the quality of the plan getting in the way. It’s the product itself. The more TWTR does to fix its problems, grow revenue, turn profitable, increase its user base and push Twitter stock upward again, the less exciting the already unexciting microblogging platform becomes.

It’s a vicious catch-22.

Bottom Line for Twitter Stock

Unlike a few too many other observers and financial journalists, I’m not going to say TWTR stock is worthless. It’s got 300 million relatively active users, and it obviously brings some value to advertisers — it’s just a matter of how much. Clearly it’s a figure considerably less than what used to be market cap near $40 billion. It’s probably still a great deal less than the current market cap of $12.6 billion, but it’s worth something, even in its current deteriorating state.

Problem is, with Ann Feely’s overarching thoughts that “It’s just an enormous time-suck for the amount of information you get from it” being the norm rather than the exception to the norm, Twitter stock could suffer far too much while the company figures out just how big it’s supposed to be, and how big it can be.

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

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