With the Dow Jones Industrial Average trading at record highs, Twitter Inc (NYSE:TWTR) is near all-time lows. TWTR stock opened for trading Aug. 3 at $16.22, against a 52-week, and all-time low of $14.12, reached in April.
Even at that, traders are paying almost 5 times sales to own this dog, which delivered yet-another loss for the June quarter and is on track to record its lowest full-year revenue since 2014.
Journalists who are seeing their careers vanish might say, cry me a river. Twitter stock at least has a business model, promoted tweets and aggregated data to back it up. The problem is that business model isn’t working any better than your local paper’s business model.
This year, TWTR dumped the Fabric software unit that made it interesting to investors, co-founder Ev Williams said he’s selling-out and rumors of its purchase by Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) or Facebook Inc (NASDAQ:FB) have died down.
TWTR Stock: In More Trouble Than Trump
The story Twitter wanted to promote in its second-quarter report was a small operating profit, 12 cents per share, on better-than-expected revenue of $574 million, while analysts had expected just 5 cents per share of operating income and revenue of $548 million. Note, however, that an operating profit is not the same as net income. The net loss was still 16 cents per share.
Worse for TWTR stock, monthly average users were flat at 328 million, and the growth rate in daily active users continued to slow, to 12%. The stock had been rising going into earnings, and the report erased all those gains.
While InvestorPlace contributor Joseph Hargett had been bullish going into earnings, a close look at the report caused other InvestorPlace writers to run the other way.
James Brumley wrote that traders were right to dump it after earnings and said after the company’s conference call that management has no self-awareness.
By focusing on news, Twitter has become a hellish landscape of hot takes and trolls, led by the troller-in-chief. Luke Lango put it more prosaically. Sell.
Twitter: People Want Side-to-Side, Not Up-and-Down
From a content perspective, it seems clear Twitter is failing as an up-and-down medium. It’s celebrities talking down to their followers, and ignoring what comes back. It’s self-promotion, not discussion.
People don’t want that. They prefer the back-and-forth of Facebook or, when it comes to micro-blogging, Weibo Corp (ADR) (NASDAQ:WB), whose stock is up 112% this year while TWTR is flat. Small wonder, then, that short interest in Twitter stock is rising and the technical indicators look lousy.
There remain some bulls hopeful of a buyout, but now Walt Disney Co (NYSE:DIS) is being promoted as the sole bidder. The idea is that Twitter is trying to address the troll problem, and that once it has made itself a safe place, the cable-and-movie palace might like it as a promotion vehicle.
The problem is that Disney would be buying what we now know doesn’t work, the equivalent of broadcasting in a world of narrowcasting and one-to-one conversation. If Google or Facebook were still interested, I might say there’s hope for the TWTR stock, but if the Disney deal gets done, the response by investors should be to sell Disney.
Bottom Line for Twitter Stock
Valuewalk concludes that the death of Twitter may be good for privacy, because Twitter’s terms and conditions make what you say there its private property.
As a journalist, I try to act as though my every action might wind up on the evening news, but my own family is far more focused on maintaining privacy. Obsessed might be a better word. None of them tweet, only one is on Facebook and my best friend in the world avoids social media altogether.
There are more of them than there are of me. As people increasingly cocoon, from a technology perspective, TWTR is increasingly irrelevant.
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 owned shares in FB.
