Are The Wheels Falling Off?
However, from an investors point of view, there’s still too much that’s going wrong for Twitter Inc (NYSE:TWTR). Starting with the executive exodus that many see as a ‘brain drain’. In this context, a recent post on Barron’s raises an important point. Are these exits “Brain Drain or Restructuring?” Yet, irrespective of which of the two these exits point to, one thing is evident, Twitter has become a revolving door for executives. Far too many executives have left the company in recent times. Among other things, these exits also suggest that a buyout may not be as close as rumor mills have led us to believe in all of 2016. What’s more, these exits are very likely to hurt Twitter shareholders, potentially swaying the company from its path to profitability, and preventing it from curbing its notoriously generous stock-based compensation expenses.
Also Read: How These Constant Management Changes Are Likely To Hurt Twitter Shareholders (2)
The other worrying trend has been the drop off in engagement levels around its live streaming of NFL games. A recent post on TheStreet notes that last week’s game between the New York Giants and the Philadelphia Eagles generated “a mediocre 416,000 tweets, retweets and other activity on the social network, according to data from Nielsen released on Friday.” These figures represent a sharp drop from the 719,000 interactions generated by “The New England Patriots’ 27-0 victory against the Houston Texans on Sept. 22″. In recent times, live video streaming has been a major source of hope for those who are betting on a turnaround. Viewed in that light, the numbers are a tad disappointing.
Twitter Buyout The Only Hope?
Everybody who’s followed Twitter Inc (NYSE:TWTR) over the last year or so knows that for every couple of non-buyout related news items about Twitter, there’s one buyout speculation lurking around the corner. Not surprisingly, the trend seems likely to continue in 2017. On 23 December, a day after Twitter reported its ad-measurement glitch, Rick Munarriz of The Motley Fool expressed his confidence in the possibility of a buyout in 2017. Munarriz has his “3 Reasons Why Somebody Will Buy Twitter in 2017“. And while he says “buyout chatter isn’t going to go away until it actually materializes, and it happening in 2017 makes too much sense now that nobody sees it coming.”, he also notes that “The social media giant’s CTO is leaving, and with it hopes of a quick buyout.”
It seems unlikely that a buyout will happen soon. And investors would do well to take a deeper look at the rationale behind buyout speculation, rather than taking every rumor at face value. After all, we have seen more than just a couple of rumors emerge in the last 12 months. However, as Shira Ovide of Bloomberg Gadfly puts it, “just because it doesn’t make sense doesn’t mean it won’t happen.” For investors with a risk appetite, TWTR stock could serve as a decent means to bet on a tech buyout. However, more conservative investors would do well to stay away from this stock for now.
Evaluating tech stocks, check out Amigobulls’ tech stock pick (3), which have beaten the NASDAQ by over 100%.
The article Twitter Inc Is Returning Money To Advertisers, Time To Sell TWTR Stock? originally appeared on amigobulls.com. Watch our analysis video on TWTR
Amigobulls.com – Watch, Analyze, Invest. Why spend hours putting together numbers you can get in minutes, in one simple video? Our ‘Robo Advisor’ videos give you every number that matters, in 1 minute. Find insightful articles with ideas on investing, top stock picks that outperform the markets, personalized portfolio analysis videos and a whole lot more. Amigobulls.com – Your Friend On Wall Street.
Additional Links:
(2) http://amigobulls.com/articles/twitter-inc-twtr-stock-looks-set-for-more-pain-ahead?ref=il&ref=im
(3) http://amigobulls.com/stocks-to-buy/top-tech-stocks/?ref=il&ref=im
