Twitter hits the magic 10, but share prices still plummet

Did you know that Twitter is 10 years old today? Yes, it’s hard to believe that it really is 10 years since Jack Dorsey first sent that famous tweet -“just setting up my twttr.”

How things have changed in a decade. From humble origins, Twitter has undoubtedly changed the way people communicate online. Whatever you may think of the micro-blogging platform, what can’t be disputed is that its 140 has, for better or worse, revolutionised social media and taught users to use their words judiciously. Like it or loathe it; Twitter has undoubtedly become the social media go-to platform for users following world events in real time.

But despite its undoubted success, the last few years at Twitter have been rather turbulent. Its share price has dropped through the floor, and staff turn-around has been unprecedented. Investors too have expressed sincere doubts about the return of Jack Dorsey to oversee the company, claiming even he can’t run two companies – Twitter and payments company, Square, simultaneously.

Never the less, Twitter still remains optimistic, thanking users in its birthday blog post for “making history, driving change, lifting each other up and laughing together every day.”

So what’s really going on with the micro-blogging behemoth? Well, over the last decade, Twitter has become a global phenomenon, with 332 million active users worldwide and 500 million tweets sent every day. No one can really dispute that it has changed the way news is reported, the way information is shared, and the way people connect with each other.

However, despite becoming a must-have tool for journalists, activists and celebrities, Twitter is still struggling to match the mainstream success of social media rivals like Facebook. In the10 years in which it has indisputably been one of the most popular social networks, Twitter has struggled to turn a profit. That, in itself, isn’t so usual in Silicon Valley in the early years; but after a decade, it’s slightly rarer.

So has Twitter ever managed to break even, let alone make a profit? Well, yes, it finally has. In the third quarter of 2015, Twitter did finally manage to turn a $7m profit, much to the relief of shareholders everywhere. However, in spite of that 2015 was turbulent year for the micro-blogging social network.

Co-founder Jack Dorsey returned to the company, and set about shaking up the management structure. CEO, Dick Costolo, was fired and other staff members were laid off. As a result Twitter saw its share price tumble from $41.65 a share at its launch in November 2013 to $22.97 at the end of 2015. That fall is still continuing, and its value hit a low of $14.31 in February, 2016.

So, what’s the problem? Why hasn’t Twitter managed to break free of the shackles and deliver on its enormous financial potential? Well, it appears to be all down to the way it’s gone about ‘monetising’ the platform.

Advertising revenue make up the vast majority of Twitter’s revenue. It has implemented a larger advertising programme, with sponsored tweets, adverts in Moments (its feed showing news and what is currently popular) and video ads.

Unfortunately, the exclusive focus on advertising has alienated and annoyed much of its audience. The number of users has fallen, and fewer people are joining the network. That’s what’s made the markets jittery and taken the wind out of its sails.

Will the decline continue, and will Twitter still be around in 2026? Well, the jury’s still out on that one. One thing is certain though: if it’s anything to do with Jack Dorsey, then the answer is probably yes.

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