Technology First Look

Twitter in turmoil: Does the departure of another top executive hint at trouble?

One pessimistic analyst warned that Twitter is 'toast' and that its shares are not even worth $10, partially because there are so many fake accounts on the platform.

The Twitter symbol appears July 27 above a trading post on the floor of the New York Stock Exchange.
Richard Drew/AP/File
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In terms of socio-political relevance, Twitter seems to be hitting its stride. The microblogging platform makes global headlines daily as President-elect Donald Trump's soapbox of choice, and it boasts some 317 million average active monthly users. But that doesn't necessarily mean business is booming.

Despite its popularity, Twitter has struggled with stagnating growth. The company laid off about 300 employees, or eight percent of its workforce, in October, and efforts to lure a buyer earlier this year flopped. And a series of high-profile exits continued this week, with chief technology officer Adam Messinger announcing his departure – adding to concerns from investors who are still waiting for the decade-old startup to turn profitable.

Trip Chowdhry, managing director of equity research at Global Equities Research in Redwood Shores, Calif., warned in a note that Twitter is "toast," as CNBC reported. Its shares could drop significantly from their Tuesday trading close at $17.92 per share, he said, because it's "not even a $10 stock."

Mr. Chowdhry, known as a particularly pessimistic analyst when it comes to technology firms, argued that Twitter has "horrible" data quality propped up, at least in part, by the proliferation of fake accounts on the platform.

"If data quality is bad, ad targeting is bad, and if ad targeting is bad, advertisers are not happy, and hence monetization will remain challenging for Twitter," Chowdhry said. His bearish take stands in contrast with the $17.02 average target price set by all analysts, according to Reuters data.

And most analysts who follow the company say hold or buy Twitter stock at this price.

Mr. Messinger, who was tasked with overseeing Twitter's engineering, product development, and design, publicly exchanged expressions of gratitude with CEO Jack Dorsey: "Grateful to @jack for the opportunity and to my team for shipping," Messinger wrote.

Mr. Dorsey, who returned last year to the company he founded, responded in a tweet of his own: "I have learned so much from you, and appreciate everything you stand for," he wrote.

Messinger did not disclose where his next steps would take him. The New York Times, citing an anonymous source, reported that Messinger is not expected to move from Twitter to a social media competitor, such as Facebook or Snapchat.

In addition to Messinger, another Twitter executive announced his exit Tuesday. TellApart CEO Josh McFarland, who sold his company to Twitter last year, said he would leave for the venture capital firm that served as one of his main investors, as Recode reported.

The latest executive exits were preceded by chief operating officer and sales head Adam Bain earlier this year and six vice presidents across a variety of departments. Twitter's product team has had three leaders in less than a year.

Twitter stock prices have slumped 23 percent this year, giving the company an approximate market value of $12.8 billion, as Bloomberg reported. Shares traded as high as $69 shortly after its initial public offering in November 2013.

Moving forward, Twitter aims to "streamline and flatten" itself and will have engineering, product, and design heads report directly to Dorsey, a spokesperson said in a statement.

"I'll be working even closer with our engineering and design teams," Dorsey added in his own statement reported by the Times, "to ensure we continue to be the fastest and best service to show what's happening in the world."

This report includes material from Reuters.

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