Twitter Inc (NYSE:TWTR) has seen its stock soar nearly 50% in just the past six months. The social media company has been plagued with losses and in its most recent quarter saw sales decline from a year ago. However, that’s not even what’s most concerning about the company.
The big problem with Twitter is that it’s business model does not make the company a good long-term buy. Twitter said this week that it would take further steps to prevent hate-filled messages and profiles from making their way onto the popular platform. The problem is that to take steps to do this will require significant resources, which will add even more costs to the company’s financials.
Facebook Inc (NASDAQ:FB) has come under fire for the fake news ads that made it onto the social media website during last year’s presidential election. Snap Inc (NYSE:SNAP) has recently announced that it would do more vetting of its stories to ensure reliable information makes its way to the app’s users.
In the case of Twitter, it’s more of a challenge to accomplish proper safeguards due to the speed at which people often tweet and how quickly tweets can reach large masses of people. As long as the social media site allows anyone to post their thoughts, it will continue to be a cesspool of the worst commentary that you can find on the internet.
Twitter’s business model not only opens up the company to potential liability, but it hurts its credibility by making it too easy for users to spread dishonest or hateful messages. To monitor and police all that content will be far too cumbersome and expensive than it is worthwhile, and that’s the biggest reason I would avoid investing in the stock.
