I’ve written quite a bit about Twitter in the last month, beginning with my External Anaylsis, followed by my recommendations for the company. Yesterday, the company announced their long-term strategy to allay investors who are worried about declining growth. That strategy?
Reach the largest daily audience in the world by connecting everyone to their world via our information sharing and distribution platform products and be one of the top revenue generating Internet companies in the world.
Pointed out by many, this new strategy doesn’t even fit in 140 characters. It is a sign that the company is just as unfocused as before, if not worse. Every internet company wants to be one of the top revenue generating companies in the world. Just stating so doesn’t make it so. Fortunately, investors weren’t duped by the new strategy, and Twitter stock fell the day after the announcement by about 6%. What this announcement means to Twitter users is a different, although similarly depressing, story. The story is a simple one, it’s more ads.
Twitter doesn’t charge users to use the service, so the only way investors can expect greater revenues is through more ads. I’m a user of Tweetbot, a third party Twitter client that doesn’t display any ads (yet), but most people use the official Twitter app. I would expect lots more ads in your Twitter feed if you use the official client.
Twitter is my favorite social network by far, so I’m extremely saddened by the unfocused management team. The latest strategy statement only makes matters worse, indicating the company is yielding to investors instead of coming up with new innovative ideas. I always believed that Twitter should have stayed private and raised equity through other means, but now, it looks like it's learning how harsh the realities of being publicly traded really are.