Media

Twitter's Importance Grows In Paris As Wall St Abandons It

Douglas A. McIntyre

Published: November 14, 2015 8:55 am

Last Updated: January 13, 2020 5:12 pm

Twitter (NYSE: TWTR) and Facebook (NASDAQ: FB) once again demonstrated its importance and its ability to provide an immediate social network for news and connection to others both locally and around the globe during the recent Paris massacre.  Users of Twitter were able to find family, friends and in many cases, shelter and support. Traditional media with its dependence on reporters, camera crews, producers and editors can never compete in the arena of immediate distribution of information in a crisis.  Traditional media now provide late versions of “fast breaking news while gathering information from social media sites where tens of thousands of people in a crisis are sharing real time news.

Wall St could care less in the case of Twitter.

Twitter’s problem shows the difference between its usefulness for instant communication during important events and whether it can make a profit. Twitter has been used to  communicate in other disasters, during uprisings and political changes in places around the world, along with providing opinions and observations from national events such as presidential debates.  Old world polling, in the case of the debates, takes hours for results to be gathered and tabulated.  Campaign managers have an army of social media experts to watch for trends as the candidates are in the midst of debates.

Twitter shares dropped below their IPO prices yesterday. Wall St. considers the company’s product as a modern telephone service which does not charge users. Advertisers have not been able to figure out a way to make money with sponsored “tweets”. As a matter of fact, there is worry among marketers that Twitter users resent them. It was the same problem Facebook suffered from three years ago when GM (NYSE GM) pulled $10 million of advertising from the world’s largest social network back when $10 million meant a lot,  just before the social network’s IPO. Facebook’s revenue rose fast enough after the incident that GM’s decision did not matter.

Twitter’s share price has fallen over 50% since the start of 2014, while the NASDAQ has risen more than 30%. The drop in Twitter’s stock has been blamed in part on management changes. New CEO Jack Dorsey has started to cut costs, and has created a new plan to make advertisers view the social networks as a viable marketing venue. However, investors worry about Dorsey, to a large extent because he is CEO of Square, which is about to go public.

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Twitter shares have not been able to escape earnings. In the last reported period, it lost $131 million. Monthly active users only grew 11% from the same quarter a year ago. Twitter’s forecast for its next quarter was even worse, in the eyes of shareholder.

Millions of people can turn to Twitter during a disaster, and it can be the most useful tool for communication during those times. Investors don’t care.