终端 > 移动战略竞争分析博客



Twitter: Not The End, Not The Beginning Of The End, But The End Of The Beginning

by Richard Guppy | 2月 11, 2016

Twitter disclosed that its Monthly Active Users (MAUs) fell in the (holiday season) fourth quarter of 2015 to 305 million, from 307 million in the previous quarter.  On the P&L side, its revenues rose to $2.2bn in 2015, up from $1.4bn in 2014.  Its operating loss was $450 million in 2015: smaller than 2014's $539m, but still a massive minus 20% margin.  

Twitter is therefore in this situation:
  • It has reached a natural ceiling for its user base.
  • Its revenues are big and growing: from almost zero in 2010 to $2.2bn in 2015 is an amazing achievement by most standards.
  • Its profitability continues negative, thanks mainly to large stock option payments to employees.  Without such payments, it would have recorded operating profit of $245m in 2015, a margin of over 10%.
Conclusion: Twitter is moving from its first phase (commercialized startup) to a newTwitter P and L phase where it makes a good candidate for acquisition.  Twitter has proved that it can hold a large user base, can grow its revenues to significant levels, and yet is still far from profitable.  While large, it is still sub-scale compared to Facebook, Google and Amazon.

This mid-position suggests that Twitter has reached the limits of fulfilling shareholder expectation (of Facebook or Google-scale growth).  It would do better now under the control of a larger company which can reduce costs by leveraging existing resources, can further boost the user base by leveraging existing platforms, and can add value by using Twitter to enhance its own business model.

Potential acquirers might include Verizon or SoftBank (in quest of new global internet/ad platforms), or Facebook or Google (in quest of market share gain in the global digital ad sector), among others.  It's not the end or anywhere near it for Twitter, but rather an opportunity for incorporation into a larger entity that could take it where it has found it cannot go alone. 
Twitter P and L Dollars m 2015
 
Previous Post: Disruptive Scenarios - Operator Price Plans | Next Post: China Watch: Smartphones - Why China Will Impact Us All
Leave a comment