Twitter (NYSE:TWTR) has been a very interesting stock to watch as of late, and when the market took a bit of a dive yesterday, I came across several posts talking about why or why not to buy the dip on TWTR. After following the stock since its IPO, I have to say that I wouldn't waste my time or money on Twitter. Today, I'll explain why now is an even worst time than in the past to buy TWTR.
Twitter's Number One Problem Started Quite A While Ago
In 2014, the number one problem for TWTR started to pop up. The company simply couldn't seem to drive new users into its social network and keep them as regular users. As we know, a social network has nothing if users aren't growing. In late 2014, this problem became a big issue for investors. By this time, TWTR had been trying different things to lift user growth, but hadn't had a plan in place to really make it happen. Instead, it was like the company was throwing money at the wall, hoping for it to stick. Soon enough, investors started to call for the resignation of the then CEO, Dick Costolo.
Fast Forward To Early 2015
In early 2015, investors got what they wanted. Dick Costolo made the decision to resign. However, this opened up an entirely new problem for the struggling social networking company. TWTR needed a new CEO. While the company searched for a good fit, Jack Dorsey, co-founder of Twitter stepped in as the interim CEO. So, here we were for months with Dorsey as the CEO and TWTR struggling to find someone to fill the shoes of Costolo. After all, any reputable CEO that cares about his reputation is going to think twice before jumping onto a sinking ship and taking control. This led to Twitter's next big problem.
Is Jack Dorsey Really The Man For The Job?
Since TWTR seemed to be dragging its feet with regard to finding a CEO that would replace Costolo, investors started to call for Jack Dorsey to step in as the long term CEO of TWTR. This was a bad call, but as we know, investors get what they want. Soon, Jack Dorsey announced that he would be taking the position as the long term CEO of Twitter. While investors cheered, my head got heavy with concern. You see, Jack Dorsey has held the position as CEO at Twitter. His incredibly unsuccessful run started off years ago. The run lasted for 2 years before he was fired because he was too busy learning how to draw and going to parties and not busy enough at work.
This time around, investors think that it will be different. After all, Jack Dorsey is a bit older this time and likely more focused. To that, I say... Older? yes... more focused? NO. Currently, Jack Dorsey is the CEO of newly public company Square (NYSE:SQ). Between the newly public company and the one having problems, Jack Dorsey simply doesn't have the time to focus on both. In fact, his lack of focus can already be seen in TWTR.
What We've Seen Since Dorsey Took Control
When we look at Twitter, it's clear that the problem is user growth. However, that doesn't seem to be clear to Dorsey. In fact, since he took on the role as CEO, we've seen absolutely no changes to user experience. Well, we've seen changes for the worst. You see, Jack Dorsey has been working to make TWTR better for advertisers as he tries to drive more revenue from the users he already has. However, overwhelming ads lead to cancellations. So, it's no surprise that daily active users on TWTR are starting to go backwards! The truth is that since he took the position as interim CEO of TWTR about a year ago, we haven't seen anything positive from the company.
Don't Waste Your Money
Here's the truth my friends, there are plenty of stocks out there that are likely to grow from here, even in the shady investing climate that we find ourselves in today. With so many strong opportunities, why would you waste your time and money on TWTR? It just doesn't make sense! Until the company finds a way to put advertisers on the back burner and really start to focus on users, users are likely to continue shrinking and the stock is going to continue falling!