Twitter (NYSE:TWTR) is having an incredibly strong day in the market today, and for good reason. Investors are cheering an act of desperation made by the company. Essentially, the company has put massive amounts of office space in its Mid-Market headquarters up for sublease. Today, we'll talk about the move, how the stock is reacting to the news, and what we can expect to see from TWTR moving forward. So, let's get right to it.
TWTR Looks To Lease Office Space
Twitter has been struggling for some time, there's no doubt about that. However, at this point, the most recent news makes the company look desperate at best. Yesterday, a large chunk of office space at the company's headquarters just went up for sublease. In fact, the company has listed 183,642 square feet of office space for lease. According to brokerage data, the space offered by the company is the single-largest sublease currently available in San Francisco.
So, why is TWTR putting a massive chunk of its space up for sublease? Well, the answer is relatively simple. The company is struggling. Since the company went public, we've seen issues with user growth, and those issues only seem to be getting worse. At this point, it seems as though the company needs the money to pad their financial data in order to keep investors at bay.
At the end of the day, since Dorsey took over as the CEO of the company, we haven't seen much by way of work on user growth. However, he has been working hard to increase revenue and show investors that there's still value in TWTR. So, it makes sense that with user growth at a standstill, the company has to look elsewhere to get revenue up.
How The Stock Reacted
As investors, one of the first things that we learn is that the news moves the market. Positive news will generally lead to gains while negative news will generally lead to losses. Personally, I view this move of desperation as a negative move. Nonetheless, it seems to be exciting investors as we are seeing growth in Twitter stock today. Currently (12:41), the stock is trading at $19.07 per share after a gain of $0.39 per share or 2.09% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bearish expectation of what we can expect to see from TWTR ahead. In the short run, investors may continue to cheer news like this. However, as mentioned above, this looks to me like a move a desperation.
At the end of the day, when it comes to TWTR, the only thing that really matters at this point is user growth. Without efforts to bring new users into the system, and improve the user experience so that these new users stick around, Twitter is going to plateau at some point. While Dorsey continues to work on ways to improve revenue at Twitter, he continues to ignore what is possibly the most important asset the company could ask for... users. The bottom line is that until the company starts to focus on users, I will continue to expect to see declines out of the stock.
What Do You Think?