Twitter Is Still Basically Broke

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Twitter is a fun platform, a great idea, and one of the most far-reaching social media platforms in use today.  I use it daily and just about everyone I know does as well.  Twitter the company, however, is basically a dismal failure.  Sure, they’ve had some success here and there, but for the most part, the company has done a big Fail Whale when it comes to economics.

I realize that this is a harsh, controversial thing to say, so hear me out.  The press lately has been full of stories about how Twitter is “turning the corner” and how it’s a “juggernaut.”  But financials say otherwise.

First, Twitter features over 100 million active users globally, but the trouble is that those users are, in large part, using anything but Twitter’s website interface to utilize the platform.  This means that they’re not easily served advertising or other items that might become revenue sources for Twitter the company.

Despite this huge flaw in their business plan, Twitter has managed to raise about $760 million in capital.  In 2010, the company brought in revenues of $28.5 million.  A respectable figure until you realize that they wrote off $67.8 million in losses that year – more than triple their income.

Current Twitter CEO Dick Costolo has been on the job for 17 months – longer than any other CEO in the company’s 6 year history – and has repeatedly said that the company was going to become profitable.  So far, it hasn’t.  Unless you count venture funding.

VC’s love Twitter.  Its latest round valued it at $8.4 billion, for reasons known only to speculators, and private shares sold to the tune of $800 million followed by another investor at $300 million.  All in August of last year.  Records were set with those huge venture investments.

But so far, no profit or even hints at realistic potential profits have been forthcoming.

It’s very difficult not to see Twitter as a huge tech bubble all on its own.  What will happen to it?  Unless they pull a serious rabbit out of their hat, the company and all of its investors may find themselves staring at a very deep chasm of failure.

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Tech Guru

Passionate about the latest Technology. I enjoy traveling and Photography.

2 Comments
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    March 23, 2012 at 6:47 am

    This is so true!

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    March 31, 2012 at 8:02 am

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