I have been talking about Twitter (Twitter, Inc. 18,23 +0,28 +1,56%) stock prices for a while now. The company has been in trouble with shareholders. While Twitter exceeded revenue in the third quarter, the company’s stock dropped by almost 13% in after-hour trading. Why?
Twitter announced a forecast for the fourth quarter significantly lower than projections. Analysts had estimates of $741.6 Million, but Twitter is stating they are expecting revenue to come in somewhere between $695 Million and $710 Million. This is a significant change.
The company also does not look to be improving user growth, despite “improvements” to the service. The number of users, excluding those who subscribe via text, have remained roughly flat between the second and third quarters. The second quarter user numbers had already driven the stock price down, despite good revenues.
Twitter’s 52 week high is $53.49. After the second quarter results, the stock hit a low of $24.38, and some experts predicted it could reach the $19.00 range, and when that price point was hit to expect Google (Google Inc. 971,47 +1,93 +0,20%) Facebook (Facebook, Inc. 152,13 +0,17 +0,11%), or even Yahoo! (YHOO 50,67 +0,07 +0,14%) to jump in with a takeover attempt.
Jack Dorsey is not Steve Jobs
Dick Costolo had been the CEO of Twitter from 2010 to 2015, but poor user growth had force him out. On June 1st, Jack Dorsey, co-founder of Twitter, assumed the position of Interim CEO. However, Dorsey’s plan was to continue with the vision already placed in motion by Costolo.
On October 2, 2015, Twitter’s stock closed at $26.31. The company announced on October 5th that Dorsey would become the CEO of Twitter permanently. Shareholders, believing Dorsey was turning things around, reacted by increasing the price to $31.34, What were they thinking?
Jack Dorsey is not Steve Jobs. I give Dorsey all the credit in the world for creating Twitter, but he obviously does not have the insight Jobs had with his customers. There is a strong argument that can be made that Apple (Apple Inc. 153,61 -0,26 -0,17%) and Jobs are one and the same, and that without Jobs, Apple is a slowly sinking ship. I do not believe Dorsey and Twitter have the same relationship.
Dorsey is much more like Victor Frankenstein—sorry, I got Halloween on the brain. Dorsey is a genius, and out of that genius came Twitter. However, like Frankenstein, he lacks the empathy and insight to understand his monster.
Jack Dorsey was a co-founder of Twitter, but lacks a real understanding of what made the social media site popular. When he became Interim CEO, he made statements that he wanted to make Twitter more like Facebook. Ask Google how trying to copy Facebook works out. We don’t have to, we see the results.
So, with that said, here are my predictions for Twitter. Between today and the forth quarter numbers being released, I expect Twitter’s stock to hit a bottom at slightly above $17 per share, but after will probably bounce in the $19-20 range.
This is exactly the range some experts predict could trigger a takeover attempt. So, keep your eyes peeled for the takeover chatter to begin again, and intensify as the price falls. Keep in mind, I’m just a commentator, the value of these predictions are nil, but I have been doing pretty well.