Twitter’s $2 billion dilemma
DIEGO LUNA | BUSINESS EDITOR | THE USD VISTA | @diegotothemoon
Twitter is a popular social networking app that is commonly used by Toreros, as well as young professionals, athletes, and entertainers. Currently, Twitter has over 300 million active users but is struggling to make profits. Consequentially, Twitter is also facing a staggering $2 billion deficit.
By definition a deficit is the difference between the money taken in and the amount being spent. This is not to be confused with debt, which can be defined as something that is owed or that one is bound to pay; debt is basically accumulated deficits.
There are some students at the University of San Diego that are avid Twitter users and were shocked to find out that Twitter is not making financial progress.
Others are more passive about Twitter’s dilemma because according to them, there are better social networking platforms.
Since Twitter’s launch in 2006, the company has not made any profits. In fact, Twitter claimed that its future revenue growth will largely depend on new users and overall engagement.
Because of the development of mobile apps, social networks set to outrun their competition by making their apps more valuable and cost-effective to their consumers.
According to Time Magazine, there are serious doubts that Twitter has the ability to reach a global audience which has been attributed to their declining user base.
Senior Colton Michael Moore discusses Twitter’s leaky news feed.
“I barely keep up with Facebook,” Moore said. “I made a Twitter account, but I only logged in a couple of times, and I feel like Twitter is a big hot mess when it comes to sorting out your news feed.”
Moore goes on to explain why he prefers using other social network platforms.
“I prefer using LinkedIn, Instagram, and Snapchat,” Moore said. “LinkedIn lets me meet people in a professional setting, Instagram lets anyone be a photographer, Snapchat lets me see where in the world my friends are, but Twitter gives me random news that are sometimes not relevant to me.”
Time magazine reports that Twitter’s shares have tumbled from a whopping $70 to below $20 per share since the beginning of 2016.
Almost all of Twitter’s revenue comes from advertising. Another source of revenue is data licensing, which is another substantial revenue stream. Twitter sells something known as firehose, which is simply jargon for public data.
On average Twitter adds up to about 500 million tweets each day. If each tweet had significant value to marketers, they’d have an unbelievable amount of data that could be used to target consumers.
The companies that buy the firehose can dive deep into the data to analyze consumer trends and sell that information to other companies.
Twitter is a publically traded company, thus a lot of their financial statements are available online. The tweets are also public, so the general public also has access to this data.
The ability to reach the market at a rapid speed is one of technology’s greatest features. According to Forbes magazine, many companies lack the commercialization resources needed to take advantage of market opportunity which is where speed to market may come in handy, especially since it can dictate success or failure.
This is certainly not the case for Twitter since they are primarily an app-based platform. This platform allows them to have speed to market.
Junior Alexis Merz has a busy schedule, and Twitter’s speed of information is able to give her the latest news at a moment’s notice.
“I’m always going somewhere,” Kissinger said. “I don’t really use Facebook that much, because my friends post useless statuses; I’d rather have ESPN, tell me the latest and greatest, it’s just quicker that way.”
Twitter CEO Jack Dorsey once said, “Twitter is what you make of it.” It’ll be interesting to see what Dorsey’s plans are to fix their staggering sales.
With the growing deficit, it’s becoming more difficult to make a clear case for its existence.