Twitter Stock Is Getting Killed (And Why It Doesn’t Matter)

Despite beating Wall Street and analyst expectations for revenue in its first quarter as a public company, Twitter shares got beat up last week following their earnings announcement.

Their CEO said they were making improvements. Some writers and bloggers piled on. But I don’t think it’s time to stick a fork in Twitter yet. I’ll try to explain why.

Twitter Announced Their First Quarter Earnings

Twitter reported $0.02 earnings per share although analysts were expecting a $0.02 loss per share. And the revenue more than doubled from $112 million to $243 million.The stock fell about 17% immediately following the earning’s announcement. They rebounded a bit before falling back to around $54 as of the close of trading Friday. The stock debuted in November at $26 and hit a high of $74.73 on December 26th.The reason for the stock plunge: while user growth was up 30% over the previous year to 241 million monthly users, the growth is slowing. And engagement of existing users was actually down 7% vs. the previous quarter.
Twitter CEO Dick Costello told reporters and analysts that they expected changes they’ve made recently to increase engagement and that the number of user retweets and favorites was up so far in Q1.

Facebook Vs. Linkedin Vs. Twitter

Danielle Kertzleben then posted this chart to show why she thought Wall Street was hammering the stock. The chart shows user growth from the point in time after they each hit 100 million users.

But she correctly points out that this may mean less than it appears. That Twitter and Facebook (and Linkedin and other networks) each has a different role in the social web and may not compete directly for users or growth (although they do compete for ad budgets).

Twitter is still 1 of the Top Social Networks and probably in the top 3 of consideration for any brand advertising along with Facebook and Linkedin.

Why None Of This Matters

Piling on a bit, John Dick published this article on AdAge that Twitter Doesn’t Represent The Real World. He claims that if you look at what people on Twitter care about, it will be different than what the average person cares about.

I don’t disagree really. I doubt that Twitter users represent our society as whole.

As I’ve written about a few times, Twitter follows the 1% rule. 1% of people like to create content. 9% of the people like to share content. And the rest of us are just voyeurs.  Quietly reading what we want and not saying a damn thing about it.

As a blogger, I found Twitter hard to figure out right away. But as soon as I started blogging, it became obvious to me almost instantly. Twitter is a great way to find other people who are interested in things that you are without having to be connected to them.

Yes the hashtag may not be the greatest invention of the 21st century, but it allows us to enter into conversations that we are passionate about. It allows us to find the influencers and the creators and the trolls in those conversations. And there are some brands finding creative ways to use it for advertising.

So I’m not too worried about Twitter. Facebook is for friends. Linkedin is for professional networking. Twitter is for sharing anything and connecting with people you would have never met otherwise.

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Michael Brenner

Michael Brenner  is a Top CMO, Content Marketing and Digital Marketing Influencer, an international keynote speaker, author of "Mean People Suck" and "The Content Formula" and he is the CEO and Founder of Marketing Insider Group, a leading Content Marketing Agency . He has worked in leadership positions in sales and marketing for global brands like SAP and Nielsen, as well as for thriving startups. Today, Michael helps build successful content marketing programs for leading brands and startups alike. Subscribe here for regular updates.

2 thoughts on “Twitter Stock Is Getting Killed (And Why It Doesn’t Matter)

  1. Completely agree, Michael. I said something a few years ago that went viral on Twitter and it mirrors what you said in your post.

    “Twitter is like a bar, Facebook is your living room and LinkedIn is your local Chamber of Commerce.”

    I think that still holds true. There is a lot of serendipity with Twitter that makes it lively and a great place to connect with others around similar interests. Great post!

    1. Thanks Brenda. I remember that quote and I agree that it still holds true. I do think Twitter has some opportunity to drive engagement. Think about Google trends but for Twitter. maybe Twitter could come up with its own ranking algorithm. I also think it could do a lot more with the whole trending topics idea. Should be interesting how they react.

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