Is Twitter a Good Investment?

3 min readMay 1, 2020

Good morning everyone, how is the trading today? This week has been the earnings release week for the tech companies, last time I’ve shared my thoughts on Facebook, and today I would like to talk about one of its’ competitors — Twitter. the platform is so unique and different, when it comes to the public conversation. As they are integrating more functions in the product these years, features like Interests and topics and huge apart of the channel now., and have made the products more intuitive to users.

At the end of Q1, Twitter’s average mDAU has reached 166 million, up 24% compare with the same period last year. Due to the Covid-19, Twitter has the highest year-over-year growth rate to date. They also have new products launched: Fleets (share something that will disappear in 24 hours, developed for saying something to friends but don’t want to be retweeted further. Has been tested in Brazil market.)

Some people may wonder that Twitter’s advertising revenue drop recently because of the cancelation of events? And at this economic downturn advertisers may have less budget for advertisement. From their financial data, while the company generated increased revenue for 2020 Q1 compared with 2019 Q1, it has operating income 7 million loss this quarter.

Twitter stock has a high volume and liked by a lot of active investors, which shows the high liquidity of the stock. But during the past several years, the stock price has been bounce back and force between $20 to $40 and did not grow further. When taking a comparing between Twitter and Facebook’s stock prices trend between 2013 to 2020, there is a big difference. For Twitter stock, there seems more uncertainties. First is the company board has been pushing to replace Jack with someone else. As the company is founded by Jack and has been managed for all these years, what strategies would the new CEO bring (if there will be) is a question mark. Even Jack will stay at Twitter, his time is divided into Twitter and Square, and these 2 businesses seems not connect or in the same ecosystem.

Also the company’s product has not been diversified, although the product has been iterated from time to time and the company do use AI to analyze user data for more accurate advertisement.

To sum up, Twitter has not been up to speed as its competitor Facebook. As there are more and more competition going on in US (Snapchat) and across the world (TikTok, Viber…), the advantage of Twitter will be reduced. So as a investor looking for 20% to 50% return of a stock, $TWTR will not be the pick for now.

Reference:

1. Twitter website

https://s22.q4cdn.com/826641620/files/doc_financials/2020/q1/Q1-2020-Shareholder-Letter.pdf

2.Yahoo Finance