Despite Twitter beating wall street’s expectations by posting impressive
revenue numbers and even a profit in its 2nd quarterly report, the
social networking company was punished by Wall Street as Twitter’s stock
dropped 11% with investors less than impressed with its slowing user growth.
User growth has been a constant thorn in the side of Twitter’s executive
team and has seem the company’s stock backslide an incredible 34% in last the
three months[1]. This really shouldn’t be surprise
as investors have consistently shown concern about Twitter slower user growth and
the company’s senior leadership appearing to be short on ideas on how to tackle
a problem that threatens its business.
What also maybe rattling investors is the company’s shrinking ad revenue
growth which was at 72% in Q1 but is now 63% in Q2. It’s been pretty much
downhill for the company since they went public as their Wall Street investors
have been dismayed by Twitter’s ineffective product strategy and generally how
the company has been managed which sealed former CEO Dick Costolo’s fate last
month. Twitter is showing all the signs of a company in trouble with its high
employee turnover among senior management as, according to the Financial Times,
Twitter has lost “more than 450 employees -- 12% of the company's staff “
Any company that reports a turnover that high over a year signals that even
Twitter employees aren’t sold on the executive team’s plans to turn the company
around and was clearly under the impression that they were on sinking ship. Just
yesterday Twitter lost two executives to Dropbox and Google which clearly shows
that former and now current interim CEO Jack Dorsey clearly wasn’t happy with
his product management staff but it’s hard to tell whether he wanted to show
Wall Street that he’s taking action to fix company’s forlorn product strategy
or the continuing brain drain that is their employee turnover.
Nonetheless, it seems Dorsey is knows that Twitter has failed so far to market
itself effectively and is currently looking for a Chief Marketing Officer to drive
home Twitter’s value proposition to capture in key markets. However this only
brings to light the state of the company as the Chief Marketing Officer role is
currently filled by their Chief Financial Officer Anthony Noto. Why a company
that struggles to market itself would let their CFO moonlight as their CMO is a
mystery and gives credence to Peter Thiel’s well held opinion that Twitter is “horribly
mismanaged”[2]. Twitter have been looking
for a CMO for months now with no luck which suggests that the company is
struggling to attract talent maybe because candidates take a look at the high
turnover rate among senior executives and get the sense that they won’t get
enough time to address the company’s user growth problem.
In sum, Twitter is not in good shape and whoever eventually takes over the reins
from Dorsey is going to have his or her work cut for them.
[1]
R.Borison, 2015, Twitter Reputation for chaos is costing it employees, http://www.thestreet.com/story/13233668/1/twitters-reputation-for-chaos-is-costing-it-employees.html
[2]
S.Gray, 2014, PayPal co-founder Peter Thiel: Twitter is “horribly Mismanaged”, http://www.salon.com/2014/09/17/paypal_co_founder_peter_thiel_twitter_is_horribly_mismanaged/
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