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Twitter Stock Price Prediction 2016: The Twitter stock price reached record lows in 2015, and the bearish sentiment will continue into 2016…
The Twitter stock price is down over 48% for the year, and it closed yesterday (Tuesday) at $24.99. That’s 4.04% below its IPO price of $26 from November 2013.
You see, Twitter stock is down in 2015 for three reasons:
- Disappointing growth in monthly active users (MAUs)
- Failure to make the service easier to use
- Concerns that recently appointed CEO Jack Dorsey can’t handle a dual role as CEO of Twitter Inc. (NYSE: TWTR) and Square Inc. (NYSE: SQ).
And Dorsey hasn’t had the easiest transition to his full-time duties…
The new CEO fired roughly 9% of his workforce in October, and the move had serious critics. Rev. Jesse Jackson sent a letter to Dorsey, expressing concerns that the layoffs disproportionately affected Hispanics and African Americans.
Aside from workplace diversity issues, Dorsey’s initiatives to make the services easier aren’t resonating with the public.
For Twitter’s new “Moments” feature, a 30-second ad was showcased during Game 1 of the 2015 World Series. But the ad didn’t connect with users. In fact, notable Appleblogger John Gruber tweeted that someone should be fired for producing it.
Another miscue by the company was the decision to change the “Favorite” button into a “Like” heart symbol. Colorblind Twitter users can’t tell the difference between the heart-shaped “Like” symbol and the green “Retweet” symbol.
In his short time as CEO, Dorsey has yet to offer positive news for TWTRshareholders. Dorsey has yet to prove he can significantly and sustainably increase revenue – a problem he had when he lost his role as CEO in 2008.
But all of these issues are negligible compared to a fundamental flaw with Twitter. And this flaw is the biggest reason why our Twitter stock price predictionfor 2016 shows more losses for TWTR shareholders…
Twitter Stock Prediction 2016: Why More Losses Are on the Way
The fundamental flaw impacting our Twitter stock price prediction in 2016 is that Twitter has never established a clear purpose.
Former CEO and co-founder Evan Williams and Dorsey have always had very different opinions on what Twitter was and how it should be used.
According to Nick Biltons’ book “Hatching Twitter,” Dorsey wanted Twitter to share updates about what was happening to an individual. Williams believed that Twitter was for sharing what was going on around you, wanting the social media site to be a platform for sharing events around the world.
The difference is subtle, but Williams viewed Twitter as a news service and believed that was its key strength. Dorsey believes that Twitter is a way to share what you are doing and connect with others in the process.
The problem is Twitter is a combination of both, which makes it a confusing platform for advertisers.
And that confusion also hurts Twitter’s potential revenue from advertising…
In Q3 2015, Twitter only increased its MAUs to 320 million from 316 million in Q2 2015. Wall Street wants to see large increases in MAUs because advertisers pay for extensive reach. The bigger Twitter’s audience, the more advertising revenue it can earn.
Twitter can’t catch up to Facebook Inc.’s (Nasdaq: FB) 1.55 billion MAUs, and Twitter has quickly fallen behind Instagram in MAUs. In September, Instagram reported that it reached 400 million MAUs, 80 million more MAUs than Twitter reported in Q3.
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The post Twitter Stock Price Prediction 2016 Shows the Stock Has Further to Drop appeared first on Money Morning – We Make Investing Profitable.
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