Last week was the latest in twitters quarterly earning’s call to shareholders and ‘the market’, and the numbers weren’t good.
Like many online services twitter makes its money from advertising and whilst it earned itself a healthy $602M in the second quarter of trading in 2016, a 20% increase on last year, this was below their $606M forecast. And to make it worse their forecast for their 3rd quarter was $590M-$610M which would see them flat quarter on quarter and way behind where analysts expected them to be.
Twitter was headline news when it announced its initial public offering a couple of years ago with commenters questioning its valuation despite it never having turned a profit. Two years on and the doubters have even more reason to question as the micro-blogging platform reported a loss of $105M for the 2nd quarter and is now forecasting stagnant growth as they face “a headwind in growing twitter’s share of overall social budgets”.
So the platform we all love is failing in the eyes of the markets, should we care? Of course not. The issue is more one of expectation and capitalism than it is a measure of the value of the platform.
What twitter has failed to become is a mainstream global platform which everybody values in their daily life and to turn that into dollars. That does not mean it doesn’t add value to its 300+M daily active users and through its role in breaking news and social uprising.
$2BN+ in annual revenue is nothing to be sniffed at and whilst it might mean that it never reaches its potential in the eyes of the market, it is far from a doom and gloom position.
Twitter adds huge value to individuals, niches, communities and millions of people around the world and its future is assured whilst it continues to do so, just maybe not its share price.