It is now a year since the Twitter IPO, and the outlook on the microblogging network is not that inspiring. The stock after a year of the IPO, though 55% higher than the IPO price of $26, has fallen nearly 10% from the first-day closing price of $44.9.In fact, this year, the stock has slipped 37%.
Revenue has more than doubled, to $361 million in the third quarter, but losses have widened to $175.5 million. Analysts have pushed back Twitter turning profitable to 2017 from the 2015 predicted at the IPO. While these numbers are feeble indicators of whether Twitter has met investor expectations, investor confidence is certainly not quite what it was a year ago.
Long-term investors, like mutual funds, as per the Wall Street Journal, had trimmed their holding from 12.6% on June 30 from 16.3% on December 13, 2013. Disenchantment is also showing among the big investors—BlackRock Inc, the world’s largest asset manager, had sold its near-3-lakh shares by the seventh month of the IPO. This dent in confidence follows from the conflicting signals regarding a consolidated business strategy that CEO Dick Costolo has sent all through the year.
At one time, the monthly active users were to be the focus of an advertising revenue strategy, and then, there was talk of designing a catch-all strategy for the “geometrically eccentric circles”, as Costolo put it, of active Twitter users, lurkers or visitors and the rest who saw embedded Twitter content on other sites. Twitter’s top management has seen very frequent changes, thanks to which, the business strategy too has remained unnecessarily fluid. It is not that Twitter is facing a problem from which it can’t recover but the company can inspire investors only once it escapes the flux it is in.