By Tiernan Ray
Twitter’s Best Days May Be Long Gone
With Twitter in the rear-view mirror, VCs think virtual reality is the “next big thing.” They’ll be disappointed.
Wall Street has a Twitter hangover.Twitter (ticker: TWTR), the short-messaging and mini-broadcast real-time news service—we still can’t figure out what to call it—has seen its shares drop 27% this year, while large tech stocks such as Apple (AAPL) and Alphabet (GOOGL) are roughly flat for the same period. Twitter is down 64% in the past 12 months.Twitter burst into the investing consciousness nine years ago, the toast of the technorati at the annual South by Southwest conference in Austin, Texas; there hasn’t been anything of similar promise to come out of South-By since.Twitter’s stock implosion, and the lack of a new Twitteresque sensation to replace it, has provoked a palpable bemusement in the tech world. Not even the return to the helm of the company’s cofounder, Jack Dorsey, last summer could fix things. As Pacific Crest equity analyst Evan Wilson put it, the stock has reached “the end of the hope trade” in terms of Dorsey’s return.TWITTER’S FAILURE IS relative. This column has argued that Twitter has fundamental problems, namely that its sound-bite format is not to everyone’s liking. Nevertheless, by many measures, it’s an impressive business. It made $2 billion in sales last year, up 58% from the year before, and is solidly profitable. It has 320 million users, nothing to sneeze at, and Twitter is on everyone’s lips in bastions of media power.Its chief failure is that it isn’t Facebook (FB); Twitter doesn’t have a massive audience of nearly 1.6 billion users. It hasn’t, in the eyes of Wall Street, gone “mainstream.”A recent report from RBC Capital’s Mark Mahaney, in which he surveyed advertising professionals, found that while more and more ad buyers were planning to increase their spending with Facebook, the percentage that planned to spend more with Twitter had declined to the lowest levels he has seen in three years of such surveys....MORE
Mr. Ray then moves on to what many tech mavens hope will be the next big thing and concludes:
...What will fix the hangover, if not VR? Wall Street at some point will have to look in the mirror and realize that not all tech companies have a massive market. The personal computer was a massive market. So was the smartphone. And Facebook’s idea of connecting everyone on the planet looks as though it might be, too.
Other things, Twitter included, are ingenious and rewarding, even if they turn out to be a niche.
