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Tuesday, April 29, 2014

TWITTER TO DIE WITHIN THREE YEARS, FIVE TOPS. #OUCH

Twitter is like Central Park of New York City. Millions of visitors use the park every year yet the City of New York earns scant revenue relative to the massive expense incurred to run the park, the policing of the park, the clean up the park and so forth.

In truth, Twitter is a dead business. The pretend execs at Twitter never have turned a profit in eight years of business. Today's quarterly report release reveals Twitter's execs have continued their streak of 34 quarters of losses. 





Today (2014- Apr-29), Twitter execs released their required quarterly income and expense statement. The quarterly revenue report released today shows that Twitter kiddies spent $1.49 for every dollar of revenue between January and March of 2014.

While Twitter's execs have tried to highlight that 2014 Q1 revs are up 119% year over year, revenues from last quarter barely grew at all, registering an on-life-support 3% ($250.3 million vs $242.68 million). Compare that pimple against the 14 times higher 2013 Q4 revenue growth (43.96%) and an average revenue growth of 21.42% between 2013 Q3 and 2013 Q2.


Table 1. Quarterly Revenue Growth
3 months ending 2014-03-313 months ending 2013-12-313 months ending 2013-09-303 months ending 2013-06-30
3.14%43.96%21.03%21.82%

Yearly revenue growth has been decelerating. Yearly revenue growth has fallen a whopping 151% since 2011. Should the trend continue with 2014 year end reporting, you might conclude that Twitter has hit the revenue growth wall. 

Table 2. Yearly Revenue Growth
12 months ending 2013-12-3112 months ending 2012-12-3112 months ending 2011-12-31
109.79%198.12%275.92%

If Twitter execs fail to get costs controlled, it's unlikely that Twitter execs ever shall earn profits for investors.

Most troubling is what Twitter execs failed to say in their 2014 Q1 report. The 2014 Q1 loss is up a whopping 390% year over year ($132.36 million vs $27.03 million)!

From Q1 2013 to Q1 of 2014, Twitter execs managed to increase expenses one and three quarters fold ($379.86 million vs $138.25 million). 

In 2010, Twitter execs spent $3.39 for every dollar earned. By 2012, these wannabes managed to cut the loss to $1.24 spent for every dollar earned. 

However, by 2013, Twitter execs managed to spend $1.96 for every dollar earned. Since the start of 2013, the quarterly trend of spending losses to gain any revenue has gotten worse — $1.21, $1.28, $1.37, $3.10. 

Q4 should be when advertising revs roll in for Xmas shopping. Yet, in 2013 Q4 Twitter execs manage to replicate 2010 dreadful performance.

From the fourth quarter of 2012 to the fourth quarter of 2013, Twitter exec kiddies managed a twofold increase of revenue but on a whopping sixfold increase in expenses! That isn't how anyone smart conducts profitable business.

Alan Wurtzel head of research at NBC Universal says Twitter fails to drive people to watch TV. 

Twitter has been little more than IRC for the SMS / smartphone phone age. No one ever could to run a profitable IRC service. It's not likely that Twitter execs ever shall run a profitable business.

Shockingly, but not surprising, pension managers of public employees retirement systems and mutual fund managers of many 401k holders made into billionaires Evan Williams, Jack Dorsey, Peter Fenton and made into a mega-millionaire Dick Costolo when Twitter went public. These guys laughed all the way to the bank. 

Twitter seems to be a bigger swindle than all of the Dot Bomb era IPOs. Twitter seems to be a bigger swindle than Bernie Madoff by many magnitudes.

Within five years, should the stock of Twitter (TWTR) trade in the single digits, expect Yahoo or Facebook to buy Twitter. Unless execs at Twitter can produce successive quarterly profits within a year or so, I don't expect Twitter to be around in five years. Do you?

If Twitter is around in five years with another 20 quarters of losses upon the 34 quarters of straight losses, then all of the stock speculation world truly are mad.

Today, TWTR closed at $42.62, losing 41.9% of its peak of $73.31 hit on December 26, 2013.

Click here for the latest TWTR price quote.

Analysis data courtesy of Google Finance.

UPDATE! For more on Twitter right here on Bizarro Theater: TWITTER VS DIRECTV; OR TWITTER REVEALS DOT COM 2.0 MADNESS IN THE 21ST CENTURY