What the Hell Is Going on With Twitter?


Source: http://www.flickr.com/photos/johanl/

Sometimes it’s difficult to see the warning signs of a company in peril, but with the recent happenings surrounding Twitter (NASDAQ:TWTR), the panic is written on the wall. The company said that its chief operating officer Ali Rowghani has resigned from the position, but will continue on as an adviser to the CEO, Dick Costolo. The Associated Press reports Twitter has no plans to replace Rowghani, and will instead delegate his responsibilities among other executives. No reason was given for his resignation.

This is only one slice of recent bad news for Twitter, which has been struggling uphill since the beginning of the year. The social media giant lost roughly $4 billion in market value over the past month, according to Wired, after many employees opted to sell off stock following a lock-up period expired six months after the company’s initial public offering. Overall, its market value has shriveled to half of the initial $18 billion evaluation and its user base has stagnated significantly. In fact, 90 percent of the platform’s content is produced by the top 10 percent of users.

Shareholders have obviously not been happy, which has been part of the reason so many under Twitter’s employee have chosen to sell off their holdings after the initial lock-up expired. For outside shareholders, the moves made by internal sources have not inspired confidence. On the first day after expiration, share price dropped 18 percent, says SFGate. To put things into perspective, the company’s share price once soared as high as $74.73, and as of this week, shares are currently valued at about half of that figure.

A Little Birdie Told Me

So the company is facing issues with declining market value, resigning executives, slowing revenues, and stagnating growth. What is exactly is the issue? It’s not exactly simple, as Twitter has been under siege from a multitude of problems. First and foremost, its user base is starting to tail off. When the platform first took off, users were excited by the instant gratification of microblogging and the fast way to share information. Since then, Twitter has been bombarded with sponsored content and advertisements, leaving many disillusioned and drawing comparisons to the declining experience Facebook (NASDAQ:FB) provides.

Speaking of Facebook, Twitter’s chief rival also holds an important element that has really stolen a lot of the company’s thunder with the photosharing app Instagram. Operating in a similar style as Twitter, Instagram has seemingly become the default favorite app for many young social medialites. Users follow each other and use hashtags on Instagram, much in the same way they do on Twitter, except for the main difference being that Instagram is photograph-based. Twitter does have another gun in the holster with its micro-video sharing app Vine, but even Vine has yet to achieve the level of popularity that Instagram has.

Another issue Twitter is facing is a product problem. According to tech site AllThingsD, a big part of that problem looks to be internal. Engineers have complained to higher-ups that there is no real way to expedite product changes and improvements up the ladder, and the results have been a platform that stagnates and loses its luster in the eyes of viewers. This comes in direct opposition to Facebook’s culture, which is more willing to rush unrefined ideas out to the public and see what sticks. Now that Twitter has shareholders to answer to, executives are going to need to find a way to move things along and keep the platform fresh if they hope to keep users on board.

What Can Be Done?

There are many ways Twitter can regain its footing, and it looks like the company plans on making the most of them. The upcoming World Cup is the biggest sporting event in the world, and Twitter has big plans to capitalize on its popularity. The company just flipped the switch on ‘hashflags,’ a new feature that works in conjunction with hashtags to place tiny flags for different countries surrounding World Cup-related tweets. Quartz reports that the company also gave its algorithm systems an overhaul to be more fluid for soccer fans trying to follow all the action. If the strategy pays off, Twitter will be able to make an appeal to millions, if not billions of potential users across the globe.

Enhanced integration with Vine, along with Vine’s growing popularity, look to be another avenue of growth. If the popularity of Instagram has been any indication, then Vine should be able to attract a swath of new users over time. But the company can’t stop there, and it doesn’t look like it intends to hold back. Personnel shakeups, like with Rowghani’s resignation, are sure to bring some fresh perspectives and minds into the creative hivemind. A recent redesign to the site’s main interface also brings hopes of increased interest from the mainstream.

Twitter is definitely up against the wall at this point, but all is not lost. In fact, it looks like the company has a few more tricks up its sleeve before it throws up the white flag. It’s also hard to deny that Twitter has done an impressive job of ingraining itself into the fabric of society, and is still one of the biggest social media networks in the world. New markets are opening up, including India, which could yield hundreds of millions of more users. A refreshed platform could reinvigorate users that have lost interest, and new features could attract those who previously found Twitter unexciting.

Twitter is up against a lot at the moment, and there is plenty of reason to be concerned if you’re a stakeholder. While recent management shakeups might not inspire confidence, it could be best for the long-term prospect of the company. If the World Cup can be a boon and drive in new users, Twitter might get right back on track.

Twitter faces a troubling outlook, but won’t go away quietly.

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