It May Not Matter Who Runs Twitter

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Several media posted rumors that the number two executive at Twitter Inc. (NYSE: TWTR), Anthony Noto, may leave for startup Social Finance, a loan financing company. Twitter is in enough trouble that the departure of its chief operating officer may not mean much.

Noto joined Twitter in July 2014. The company’s share price has fallen 39% since then. It is hard to blame Noto. Twitter’s business model has been a resounding failure. Its chief executive officer, Jack Dorsey, has been attacked for failing to capitalize on Twitter’s huge membership base, as well as his decision to be CEO of another public company — Square Inc. (NYSE: SQ) — which is in the mobile payment business. Dorsey stepped down in October 2008 but returned in July 2015 to save the Twitter. It has not worked.

Twitter is among the most famous of the social networks, primary because of its use by the president and many other celebrities. The Twitter members with the largest followings are entertainers Katy Perry and Justin Bieber, former president Barak Obama and singer Rihanna. Donald Trump is number 20 on the list of people with the most followers.

Perhaps Twitter’s most important measure is monthly active users. In its most recently reported quarter, the number was 330 million, up from 326 million in the immediately prior quarter. Twitter’s revenue fell 4% in the quarter to $590 million from the same quarter a year ago. Twitter had a net loss of $21 million, compared to the loss of $103 million in the same quarter of 2016.

Twitter is struggling enough that it cannot find a buyer at anywhere close to its valuation. There were rumors that Alphabet (parent of Google), Disney and looked at Twitter in late September and early October of 2016. None of the companies made a formal offer, a sign that they believed Twitter could not be made into a financially viable business.

Noto may be one of Twitter’s most important executives, and according to some investors its most important. Twitter is in bad enough shape that whether he stays or goes will not make much of a difference to the social media company’s future.