Twitter Inc (NYSE:TWTR) is the technology company no one wants. After rising to nearly $25 per share on speculation it would be sold, TWTR stock has fallen below $17 after several companies stated they just were not interested in it.
Among the great companies that have recently said they don’t want to buy Twitter are Salesforce.com, Inc. (NYSE:CRM), Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT). Although rumors Softbank Group Corp (OTCMKTS:SFTBF) might make a bid have also spread, that hasn’t helped TWTR stock either.
Twitter stock has been called a “mess” and “uninvestable”, but its problems are entirely of its own making. To understand them, simply set your wayback machine to the year 2011 and put TWTR stock under a microscope.
Twitter vs Developers
TWTR has a developer program but recently cancelled its developer conference, called Flight, in favor of regional events.
While rivals like Facebook Inc (NASDAQ:FB) make headlines with their own developer conferences, Twitter has had a difficult relationship with its developers ever since 2011, when it told them to stop developing client applications and then imposed strict new rules through a blog post. By the time the company even thought about loosening its restrictions, no one cared.
Instead or nurturing third-party developers, TWTR purchased the apps that seemed popular at the moment, like Posterous, then let them fail, preferring that consumers access the service through its own Web site.
The strategy seemed sound to some analysts, but by 2015, reporters were writing about a Twitter “war on developers.”
TWTR Does Not Scale
The problem with Twitter is that its interface doesn’t scale.
It’s fine if you are not famous, like me. If someone bothers me, I just mute or block them with a single mouse click. But if you are famous, like Donald Trump, or you become famous, like Leslie Jones, this manual process becomes a nightmare.
Trump has helped make TWTR big again, but if you track reactions to his Tweets, you see the problem. There are so many responses, both positive and negative, that no person could possibly respond. The numbers need to be aggregated, machine-read and totaled into meaningful data.
Jones was attacked by trolls this year — people who tweeted vicious, hateful things to her account — after co-starring in the successful re-boot of Ghostbusters. Her problem drew so much attention she got a personal meeting with Twitter CEO Jack Dorsey, who removed several accounts from the service.
If you have a few people responding to your tweets, as I do, you can get full value from the service. If you have thousands responding to your tweets, you can’t do that. What’s needed is an automated system that will mute trolls, alert the service to problems and notify the famous user of only those responses that are worth the time to look at, and possibly answer.
But TWTR doesn’t have such a “pro” interface. It has its own developers focused on trying to turn its data stream into meaningful market intelligence, and it has sent its third party developers elsewhere. The problem is serious for Twitter stock, because non-famous users are driven to the service by famous ones, and if the famous ones leave, the non-famous ones will too.
Bottom Line on TWTR Stock
Twitter stock needs new software to back it up in order to remain relevant. The company has to find a way to deal with automated bots that mimic human users, and to protect high-volume users from abuse.
It will now cost Twitter a lot more to lure third-party developers back to its service than it would have even a few years ago, but it’s something TWTR has to do or it will soon become irrelevant. Until it makes a decisive move toward improving its user interfaces, don’t buy Twitter stock.
Dana Blankenhorn is a financial journalist who dabbles in fiction, his latest being The Reluctant Detective Travels in Time. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing, he owned shares in MSFT, GOOGL and DIS.
