Pressure mounts on Twitter as shares slump below initial market price
Investors are growing increasingly concerned over Twitter’s lack of growth and its inability to compete with Facebook.
Twitter’s mounting troubles in recent months which stem from its inability to pull in new users have culminated in another slump in the company’s shares are now less than 65 per cent of previous highs.
Shares in Twitter fell another 6 per cent yesterday to $26, leaving it some way off its 2013 peak of $69 a share. The figures reflect investor fears on Twitter’s inability to show that it can continue to grow its user base similar to Facebook.
The Facebook comparison has been a major thorn in the side of the microblogging site which has been plagued by its rival’s growing success. Facebook’s user base is up 13 per cent on last year to 1.49 billion; almost half of the world’s internet population.
Twitter’s success however has stagnated. Last month the company reported its slowest user growth since it went public, from 302 million to 304 million active monthly users. Following on from this a number of major investors sold their stock in the company, further damaging the vulnerable social media giant. Harvard, the world’s wealthiest university, sold 29,856 Twitter shares between April and June. Yale University sold all of its 34,345 shares, worth just under $1m and Stanford sold 18,000 shares.
This led Jack Dorsey, co-founder and interim chief executive officer, to say to investors that the slowing growth was “unacceptable and we’re not happy about it”.
Despite the concerns some have been buying up shares in the company, including a number of Twitter executives, which has been seen as a sign of faith and support in the company. Jack Dorsey himself bought more than 31,000 shares, totalling $875,000 and Twitter board member, Peter Currie, purchase of around 9,200 shares, equalling $250,000. Venture capitalist and Twitter board member Peter Fenton purchased around $200,000 in stock while the company’s chief financial officer, Anthony Noto, made a similar sized purchase.
The show of support amongst Twitter investors also extends to Dorsey who many want to see appointed as the permanent CEO of the company. Outspoken Twitter investor Chris Sacca tweeted his support for Dorsey earlier this month saying that the interim CEO had the right product vision. Prince Alwaleed bin Talal, who owns a roughly 5 per cent stake in the company, also pledged his support for Dorsey after responsing to a question on whether he should be made permanent CEO with “I would support him.”
Regadless of the support for Dorsey, the uncertainty over Twitter’s permanent CEO appears to be hurting it. It has been two months since ex-CEO Dick Costolo left Twitter and Dorsey’s role as CEO of of Square, the mobile-payments company he founded that’s slated to go public later this year, would mean he could only serve as twitter’s CEO on a part-time basis.