Twitter (TWTR): Did We Get Played for a Fool?

Written by Ophir Gottlieb


Twitter Inc. (NYSE:TWTR) has suddenly become communicative, spreading its substantially improving strategy to the public. Are the changes real, or did we just get played for the fool?


There is only one company on Top Picks that is actually at risk of being dropped because of a single earnings release, and that is Twitter Inc. We have laid out in in chapter and verse the wonderful progression the company has made into a newly defined social live streaming video company, with tons of wonderful content and partnerships. You can review some of those dossiers here:

Twitter Has a Surprise for Wall Street
Top Pick Spotlight: Twitter's Innovation is Booming
Twitter Stakes a Claim to Massive Sports Market
Twitter is Becoming the New Television
Twitter and Apple Form a Critical Alliance
Twitter (Finally) Monetizes Periscope
Twitter Strikes a Deal With Bloomberg

The titles alone may do the trick as a functioning rehash. But, there is one thing that has occurred to me -- and I didn't like it.

Did I Just Get Played for the Fool?

Walk down this path with me, if you don't mind.

I have had a bone to pick with Twitter Inc. (NYSE:TWTR) which has been its lack of communication with the market. It has been stunningly bad.

The company hired Natalie Kerris as the VP of Communications. This is the Nat Kerris who was the head of comms for Apple during the iPod all the way through the iPhone. She was a stud. I know Natalie, which is to say I have met her, spent some time, spoken at length about Apple and as much as she could say about Twitter. She's amazing.

But, Natalie is a squeaky wheel if a squeak is needed. That was applauded at Apple. That was not applauded at Twitter Inc. (NYSE:TWTR). Not too long after her arrival, she was gone. We reported on it in CML Pro.

Now, with that background, I want to allow us to walk down a path where I may have been played the fool. Back to my bone to pick. While the melee was being played out surrounding the Twitter Inc. (NYSE:TWTR) takeover saga, I thought of something, perhaps paranoid. All of a sudden, Twitter Inc. was cranking out positive news.

In fact, much of the dossiers I linked to above were driven from those press releases from the company. I had a thought, not an accusation, and here it is in short:

What if Twitter Inc., notorious for not reporting news, all of a sudden was reporting good news to make it look like a shinier new toy for a takeover?

The second that thought filled my mind, I swallowed hard. If true, that would mean I was the fool -- reporting so vigorously on what felt like new information and progress, but what might have been much ado about nothing.

Well, here we are, and the good thing is, we will have an answer. On October 27th after the market closes, Twitter Inc. (NYSE:TWTR) will report earnings. Now, if the company does not report growth, does not talk about accelerating ad revenue and large brand clients, then you know what, I was wrong -- and wrong a lot.

This is one of the very few times I will ever weigh a single earnings release in such a manner that will impact my decision about the firm's future for the long-term. We must hear that the future projections (not the quarter to be reported) for Twitter Inc. (NYSE:TWTR) are getting taken higher or this is off of Top Picks, and likely forever.

I'm a big fan of Jack Dorsey, Anthony Noto, Adam Bain and Leslie Berland. But if all of the news the company has delivered in fact does not translate into higher forecasts, an upbeat look at growth and a legitimate bullish thesis in line with the one we have created for CML Pro, then something has gone horribly wrong.

Twitter Inc. (NYSE:TWTR) has become the one thing we generally do not want: A quarter to quarter decision. So note, risk is high, right now.

We note the immediate-term risk to Twitter. The author is long shares Twitter Inc. (NYSE:TWTR).

Thanks for reading, friends.


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