When Twitter went public in 2013, there was hope on Wall Street that it could be the next big tech stock. But things didn’t go as expected. However, Twitter stock has been on a roll during the final quarter of 2017. Although eventually it ended the year with a slump, Twitter will grow 25% this year because of this run. For a stock that showed very little promise for the best part of 2017, this is a massive turn around.
The Twitter run is not a fluke though. In October, the social media giant finally released a positive earnings report. This was very significant in improving investor sentiment. Twitter has also been open to making changes in order to improve the user experience. It’s just recently that the social media platform decided to increase the number of total characters in a tweet to 280. Twitter also introduced an algorithmic timeline last year, a big change in its core product.
We are also seeing a lot of efforts in enforcing new rules aimed at reducing harassment and abuse on the platform. This is an issue the company has grappled with for years. Early in 2017 Twitter confirmed that it will be putting in place new rules and regulations for handling hateful conduct and abusive behavior on its platform. It seems that so far the company is keeping its promises.
Nonetheless, even with this incredible end of year run, Twitter is still not out of the woods. The volatility of its stocks is very problematic and such short-term gains could be easily eroded over a very short timeframe. The company needs to restrategize or find a way to reignite growth in the near future. Twitter needs to expand its user base and increase user engagement too.
For most tech stocks it’s always about the long-term value, and this is something that Twitter has always been clear about with its shareholders. But even then, short-term gains are also important and can be a big turning point for a company in the stock market. Twitter could easily use the momentum of the last few weeks to innovate for growth, attract more talent, and to also motivate employees to do better moving forward.
From an investor’s point of view, there is no doubt that many will hope the company continues to embrace change and adopt newer ways of doing things. We have seen a lot of that in 2017 and the stock performance was relatively better in the end.
Increasing monthly active users is also a strategy that can bear fruits but in the face of competition from other major social media platforms, it’s very unlikely that success in this front will come easy or soon. It seems that Twitter has some sparks left though and with the right approach the company could once again prove very attractive to the stock market. But there is still a lot of work left and the social media giant knows exactly what needs to be done.