Many commentators would probably claim the biggest event concerning Twitter (NASDAQ:TWTR) during the past year was the CEO change-over from Jack Dorsey to Parag Agrawal in November. Indeed, there’s no denying this was a momentous occasion for loyal TWTR stock holders.
Yet, at the same time, there’s another phenomenon that could impact the direction — and the value proposition — of Twitter in 2022. It involves the issue of free speech, which Americans hold near and dear.
Of course, Twitter is a private enterprise and the U.S. Constitution’s First Amendment doesn’t require Twitter to permit any and all speech on its platform.
On the other hand, swinging the proverbial “ban hammer” can have long-lasting consequences. This isn’t about politics — it’s about business, plain and simple, and emerging competition from alternative media platforms could be problematic for Twitter and its stakeholders.
A Closer Look at TWTR Stock
As InvestorPlace contributor Mark R. Hake concisely put it, Twitter had a “rough year” in 2021. According to Hake’s calculations, TWTR stock “started 2021 at $54.15 but closed at $43.22, representing a loss of 20.2% for the year.”
We can’t blame this poor performance entirely on the recent “tech wreck.” After all, the tech-dominated Nasdaq index booked a solid gain in 2021.
Still, it’s undeniable that the broader tech-stock slide has had an adverse impact on TWTR stock. Shockingly, the Twitter share price tumbled from $66 in October 2021 to just $40 in early January 2022.
To find anything resembling a support level, you’d have to go all the way back to late 2018 and early 2019. During that time, the buyers held up the $30 level pretty well.
If TWTR stock actually gets down to $30, it will be hard for some value hunters to resist taking a long position. Yet, I’d encourage them to monitor the headlines closely, as Twitter seems to be heading in a direction that some folks don’t appreciate very much.
A “Cesspool of Anger”
There’s no denying that some suppression of free speech is necessary in civilized society. To cite a well-worn example, it’s not acceptable to yell, “Fire!” in a crowded movie theater.
Social media isn’t exactly a crowded movie theater, though it is crowded and replete with incendiary personalities. As Agrawal took the helm at Twitter, he immediately faced the task of cleaning up the platform.
To quote InvestorPlace contributor Dana Blankenhorn, it had become a “cesspool of anger” and some celebrities were leaving Twitter as a result.
Very soon after Dorsey’s announcement of the CEO-level changeover, Twitter stated it would no longer allow the sharing of private photos or videos without consent. Celebrities are an exception to this rule, however.
Prohibiting the sharing of private photos or videos without consent is understandable. Twitter has gone further than this, though — and some social media users would claim the platform has taken its ban practices too far.
Weighing the Alternatives
It’s no secret that Twitter banned former President Donald Trump’s account in January of 2021. More recently, the platform terminated the personal Twitter account of Republican U.S. House Rep. Marjorie Taylor Greene.
The point here isn’t to debate whether or not these bans were justified. Rather, it’s to consider whether one ban could lead to many more, and whether this could be problematic for Twitter.
Not long ago, Twitter suspended the account of Politics For All, a political news aggregator that had reportedly garnered nearly half a million followers. Again, this action may or may not have been justified. As Twitter bans or suspends more accounts, however, other platforms could steal some of Twitter’s market share.
One example is Trump Media & Technology Group (TMTG). Reportedly, TMTG will launch Truth Social, a conservative social media platform that says it will emphasize First Amendment rights. TMTG is investable through shell company Digital World Acquisition (NASDAQ:DWAC).
Another alternative is conservative-leaning Rumble, a Canadian company designed to rival Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) YouTube. That company is investable through a blank-check company known as CF Acquisition Corp. VI (NASDAQ:CFVI).
The Bottom Line on TWTR Stock
Twitter’s status as a go-to platform for short-form expression may be in jeopardy. Some moderation is necessary, but it’s difficult to know exactly where to draw the line. Is it possible that Twitter could lose significant market share to more permissive platforms?
This is a concern that TWTR stockholders need to consider. So, while buying the shares at a discount might be tempting, be careful. Watch out for free-speech-focused alternatives, as they could pose a serious threat to Twitter in 2022.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.