TweetDeck Can't Cure Twitter's Zero Growth Problem

We’re also not sure of Twitter’s true intended market. While it calls out journalists, marketers, and professionals, several demographic questions in the survey clearly stood out as more than a bit bizarre.

When was the last time you saw a product-oriented survey ask respondents if they felt the world was not a good place or if they don't have particularly happy memories of the past?

This is not to say that enhancing TweetDeck is a bad idea, as we believe it could potentially drive software-like margins (that investors would love to see in Twitter’s results). But who exactly are they targeting?

The market for this type of product is already heavily saturated, and we’re not sure if Twitter has the clout (or the will) to make this a dominant play (based on our discussions with a few Twitter power users, it would have to significantly enhance the analytics features beyond what was disclosed in the survey).

The Price Point of Happiness

From a revenue perspective, this particular version of the survey is pretty clear about pricing: it’s a $9.99/month opportunity (note: some early recipients of the survey have reported seeing different price points).

At this point in Twitter's life cycle, $9.99 alone is unlikely to have any material impact on revenue or profitability. Assuming a more-than-generous adoption rate of 1% of its current users (3.19m users), that only generates $382m/year. Note this is “replacement” revenue, as the new service would be ad-free, partially removing these users from the ad-revenue stream. Just as importantly, it does nothing to address Twitter’s far greater issue of flat (or potentially negative) user growth.

Negative Twitter Growth?

Twitter's self-reported growth rate of MAUs (monthly active users), its primary metric for potential opportunity, has declined markedly. From 20% in 2014 to 6% in 2016, the trend is certainly cause for concern.

Bots are fake/automated accounts that, while active, do not provide any reasonable revenue value for Twitter directly (note that they do provide value for the owner of the bot). Bots typically either engage (as a simple response, like the @Yoda_bot that responds to users with Yoda-esque Star Wars quotes) or amplify (by creating massive networks of fake users that follow key individuals and amplify their messages). It’s the latter group that is most troubling for Twitter.

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Disclosure: I am/we are long FB, MSFT; I am/we are short AAPL. 

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Kurt Benson 3 years ago Member's comment

Excellent analysis of the challenges facing #Twitter. $TWTR

Fred McClimans 3 years ago Contributor's comment

Thanks, Kurt - I appreciate the feedback! Twitter is one of those companies/equities that has had tremendous potential. As a user, I rely upon it every day. As an investment, however...