Twitter's Stock Needs One Thing to Happen to Go Higher
Posted at 7:16 a.m. EDT on Wednesday, June 17, 2015
If you build it, they will come, but maybe they won't stay.
That's the Twitter (TWTR) twist on Field of Dreams, because one billion people have tried Twitter and it looks like -- we can't be sure -- only about half have stuck around. When you add in that new user growth has stalled, you recognize that this company may be on a trajectory to have net fewer users this year than last.
And that's the crux of the problem.
I have been noodling on this issue ever since the company did something with CEO Dick Costolo and chairman Jack Dorsey last week - frankly, I am not sure what -- to bless the continuity of that trajectory with straight faces all around.
My confusion here -- why I say, did "something" -- stems from the disastrous interview Costolo and Dorsey had last week with CNBC, the interview that suppressed the stock of Twitter even more than had been the case the night before.
So let's go back in time and focus on what happened here.
First, we got a somewhat jumbled and confuse statement out of Twitter about Costolo being out as CEO. That caused the stock to immediately shoot up 13%. That's the correct reaction, because it had become obvious to any large institutional holder -- not Twitter follower, but large holder -- that the downward trajectory of users was unacceptable.