Twitter Stock and Slowing Growth

In mid-December I bought Twitter stock for ~$45 a share.  Here’s why: 

  1. I’m bulling on Twitter as a social network. I think it has lots of great use cases that almost anyone could benefit from.  It will only grow in popularity once people start realizing what it is. 
  2. I think Dick Costolo is a great CEO and product person. I’ve watched numerous interview with him (including this great PandoMonthly one), have followed his path since Feedburner, and I believe he has the company running on the right track and is doing a great job.
  3. Twitter is just now starting to monetize but I think they’ll be able to pull in a good amount of money.
  4. When I bought their market cap was 20 billion.  At 10x multiples, that means they have to have yearly revenues of $2 billion.  That seems feasible for me that they’ll get there.

I was happy with my purchase. Then, on Wednesday night Twitter announced their first ever earnings since going public.  What a disaster it was.  First off, everyone compares them to Facebook even though they are completely different.  Second, they have seemed to have stopped growing.  Look at this chart:

That’s not good.  They need to grow.  They only added 1 million US users in Q4.  Wow, that is a crazy low number. 

So, while I am still a believer, I think it might be a tough year or two (or three) until they hit mainstream.  Trust me, it’ll be a better world when they do.  

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