Twitter has made a profit- but can it ever justify its current share price? Would we want it to?
Lots of people like Twitter, maybe they love it. But love does not bring money in – and that has been Twitter’s problem.
In the latest quarter the company made a profit of $91.1 million, versus a $167.1 million loss last year. Revenue hit $732 million, up two per cent.
Shares rose on the news – this is a company whose share price has been totally unperturbed by recent stock market falls. In fact, the Twitter share price is at a near two and a half year high, but is less than half its of all time high set in 2014 and a quarter off the IPO price from November 2013.
But its problem is with its market cap – around $22 billion.
For it to ever justify that price, one day profits will have to top a billion dollars a year, go close to two billion.
And the question its users may be justified in asking is, would they want it to?
Do people want Twitter to change too much, is there a risk that if it ever did make that kind of money the user experience would be impaired?
We live in funny times. Google and Facebook enjoy the lion’s share of ad revenue, but not the lion’s share of our online time.
What we want is great content, as unencumbered by pervasive advertising as possible.
What we get are pop up ads, click bait articles and an editorial approach that desperately tries to make money in the age of the Google/Facebook duopoly.
As for Twitter – what many users want is for its approach to evolve, the odd experiment, such as increasing the number of characters in a tweet, but nothing too radical. To justify its share price, Twitter may need to go down the radical route.