Despite the fact that many companies wanted to acquire Twitter (TWTR, Financial), the company failed to convince even a single potential suitor. While bulls were expecting a bidding war due to the apparent interest of so many companies that included the likes of Disney (DIS, Financial), Microsoft (MSFT, Financial) and Google, the failed acquisition just shows that none of the companies saw any value in Twitter.
Even Microsoft, which paid a hefty premium for LinkedIn (LNKD, Financial), decided to pass on Twitter, which is a sign of bad things to come.
Censorship will be an issue
Twitter has been censoring a lot of people with conservative views, and this may not go down well with a large portion of the company’s user base. In addition to the censorship several people have complained about the company’s bias when it comes to tackling hate speech.
Alienating a large portion of its user base will certainly be bad for Twitter, especially since it relies on user engagement for generating revenue. Hence, investors can expect revenue and user count to underperform going forward.
Not shareholder friendly
Twitter’s management has always had a reputation for not being shareholder friendly. Twitter’s management is likely aware that such biased initiatives against free speech will hurt its user base which in turn will be bad for its shareholders. Yet the company’s management has decided to ban conservative accounts and pro-Donald Trump accounts.
In addition to this, Twitter’s CEO Jack Dorsey doesn’t seem to be interested in running the company anymore. He’s the CEO of Twitter as well as Square which can’t be good for the shareholders of both the companies. The situation seems to be worse for Twitter investors as it seems like the management, under the leadership of Dorsey, is sabotaging the company’s future prospects.
The banning of conservative accounts will probably lead to several users boycotting Twitter in the near future, which is why the company’s next quarter results will be terrible.
Final words
Suppression of free speech and the ban bias will surely not go down with Twitter users, even the liberal ones. Not allowing people to debate on Twitter, or banning one side from debating altogether, is going to be have serious implications for Twitter’s user base and levels of user engagement. These latest developments will ultimately be reflected in Twitter’s quarterly numbers in the coming months, which will be bad for long-term shareholders.
Disclosure: No position.
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