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Twitter Isn’t Getting Fitter

Twitter Isn’t Getting Fitter

MIRIAM GOTTFRIED

June 12, 2014 4:31 p.m. ET

It hasn’t gotten much easier to be a Twitter TWTR +3.52% user. The same is true for Twitter investors.

The micromessaging service’s struggle to jump-start user growth was thrown into the spotlight again on Thursday with the resignation of Chief Operating Officer Ali Rowghani. It is unclear whether Mr. Rowghani’s departure resulted from anything more than internal politics. But the fact that he was in charge of Twitter’s product team, tasked with making the platform more appealing to new users, highlights the company’s ongoing problems.

Desktop users were reminded about the clunkiness and complexity of Twitter’s Web platform when they were forced onto it Wednesday during a temporary outage of its TweetDeck application. The shutdown, enforced while the company dealt with a security bug, also underlined the service’s reputation for being prone to glitches.

Granted, Twitter is primarily a mobile-focused company, with 78% of its monthly average users and 80% of advertising revenue coming from that platform in the first quarter. But its mobile application also could use some tweaks, including the ability to view customized lists of people followed, as is possible on TweetDeck.

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These details matter because Twitter’s rich valuation rests on its ability to grow its user base. The company failed to satisfy lofty expectations in the first quarter, reporting sequential user growth of 6%—only slightly better than the prior quarter’s 4%.

While Twitter’s stock price has fallen nearly 42% this year, it still isn’t cheap. On a diluted share count, it still trades at 20 times forecast 2014 sales, against less than 14 times for FacebookFB -2.27%

Twitter’s revenue has been rising quickly. But if it can’t win over more users, winning over investors will be an even bigger challenge.

 

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About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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