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Twitter The Stock And Twitter The Service Are Worlds Apart


Image via Vanity Fair

Twitter, which many have grown to have a love-hate relationship with, was founded nearly 14 years ago, on March 21, 2006. Twitter ranks as the 12th-most popular social media site, as measured by monthly active users, with approximately 335 million. For the 10% of users that send 80% of the tweets, as measured by U.S. accounts, Twitter has become an addiction of sorts.


Whether utilized for news, sports, following celebrities or just to browse funny GIFs, hundreds of millions of people find immense value in the site. For news, in particular, Twitter has essentially become the de facto go-to source for breaking news, whether it be politics, financial news or celebrity gossip.


However, from an investment standpoint, Twitter the stock is the polar opposite of Twitter the service. Twitter went public on November 7, 2013. Twitter shares jumped 73% on the first day of trading, opening at $26.00 and closing at $44.90, giving the company a valuation of around $31 billion. Investors rushed to buy the stock, sending shares of Twitter to an all-time high of $74.73 the following month.


More than six years later, that all-time high still stands despite the S&P 500 having gained about 75% over the same period. While still trading above its IPO price, shares of Twitter are now down nearly 60% from their high with a current valuation of just under $25 billion.


Yesterday, amidst the flaring tensions between the United States and Iran, U.S. President Donald Trump sent one tweet that illustrates just how important Twitter is. Trump tweeted "These Media Posts will serve as notification to the United States Congress that should Iran strike any U.S. person or target, the United States will quickly & fully strike back, & perhaps in a disproportionate manner. Such legal notice is not required, but is given nevertheless!"


The United States hasn't formally declared war since June 5, 1942, opting instead to use the term "authorization to use military force." On at least 125 occasions, the President has acted without prior express military authorization from Congress. Trump's tweet is very likely the first instance where the terms in which a war could start were spelled out on Twitter.


The tweet also serves as a reminder that a product, no matter how vital or popular, does not equate to a good business or investment. For instance, Alphabet, Microsoft, Salesforce.com, Verizon, and The Walt Disney Company all reportedly showed interest in acquiring Twitter before deciding against it.


"The troubles were greater than I wanted to take on, greater than I thought it was responsible for us to take on," Disney CEO Bob Iger recently said of the decision. "There were Disney brand issues, the whole impact of technology on society. The nastiness is extraordinary."


While Twitter seemingly becomes more important by the day, in terms of the news it generates, and as the go-to platform for some of the world's most important people to convey their message, it may also go down as the most prominent example of a great product being a poor investment.


Leftover Crumbs

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