The president-elect has turned Twitter into a replacement, in terms of covering the head of the world’s most powerful nation, for network television news, cable television news, radio news, newspapers and the online versions of each of these. The weaknesses of the Twitter Inc. (NYSE: TWTR) business model almost certainly have not been helped by Trump’s activity, nor will they be. Twitter’s deep flaws cannot be erased by its role as a medium for Trump or a large number of other celebrities, sports events or politicians.
Trump has made comments on Twitter that have affected America’s relationships with China, Russia and Israel. He has pressed, seemingly with success, to drive down the price of Air Force One, which is to be built by Boeing Co. (NYSE: BA), and of the Lockheed Martin Corp. (NYSE: LMT) contract for the F-35. Twitter, unfortunately for it, does not get a dime of the savings for these government programs, nor any credit for changes in the global political landscape.
Trump has 17.8 million followers on Twitter, which does not even put him in the top tier based on the count. President Barack Obama has 80.2 million. The person with the largest following is singer Katy Perry, with 94.8 million. As a matter of fact, Trump is 74th in terms of followers.
Trump’s presence on Twitter might be characterized as having more velocity than other well-known members. His tweets have an immediate effect across a great swath of the United States and other parts of the world. He is also a frequent tweeter, among the members with the most followers.
Twitter remains an enigma to investors. Its only good future appears to be an M&A conclusion. Several large companies, led by Salesforce.com Inc. (NYSE: CRM), have considered a purchase. The potential buyers disappeared as quickly as they came.
Twitter’s shares trade at $16.50, near the low end of their 52-week range of $25.25 to $13.73. The only reason the stock breached $25 on the upside was buyout rumors. The stock is down 56% over the past two years.
Twitter has two immediate, troubling problems. The first is that growth in its user base has slowed to near zero. In its most recently reported quarter, the third of 2016, active monthly users rose just 3% year over year to 317 million. For the same periods, revenue rose only 6% to $616 million. Facebook Inc. (NASDAQ: FB), the world’s largest social network, had revenue of $7 billion for the third quarter, up 56%. Twitter’s forecast for the upcoming year was grim, and it gutted its employee base with layoffs of 9% of the staff.
Twitter’s other problem is that marketers have not found it a successful medium to advertise products and services. This is despite Twitter’s effort to add more “advertiser friendly” services.
Over the past year, some of Twitter’s most important executives have left the company, either under their own power or due to decisions by CEO Jack Dorsey. One of the founders, Dorsey returned to Twitter as interim CEO on July 1, 2015, and took the job permanently on October 5. The primary criticism of Dorsey is almost as damning as it could be. Twitter’s prospects have moved into reverse since he because its leader.
Twitter’s members include the most well-known people, products, media, politicians and celebrities in the world. At this point, and perhaps for the next four to eight years, Trump will be its most important member. That is if Twitter is still in business that long.