Twitter shares tumbled 24% to close at $50.03 after it reported slower growth in user numbers in Q4, 2013 vs. the previous quarter. The 3% growth was also slower than the first two quarters which grew by an average of 10%. More importantly however were the numbers. The company reported a net loss of $645 million for 2013, which was expected by analysts, who instead highlighted Twitter’s revenues, which rose 110% last year to reach $665 million dollars
But there’s a more important point to make here. It’s time for someone to finally challenge the idea of stock speculation. When placing value and long-term price speculation on stocks like Twitter, Facebook and LinkedIn, there are NO EXPERTS!!. If the followers of Twitter and LinkedIn lost interest or a new site is developed to challenge them, they could be in serious jeopardy. NO ONE NEEDS Twitter or Facebook. The very fundamental purpose for the existence of these companies is uncertain. Everyone needs gas for the cars, oil to heat their homes, clothing to dress their children or operating systems for their computers. But technology and websites are constantly changing and no one knows when the next big fad will hit. Facebook is already losing steam with some young followers. Add to that, the fact that advertising can’t be your most important source of revenue and you have a real problem. Only false hopes and fantasy keep the stock prices of money losing companies at these unprecedented levels. A company that loses hundreds of millions of dollars cannot have a valuation in the billions of dollars no matter how creative the accounting. And at some point, when these companies crash-land, no one should be surprised or ask questions. The insanity has somehow become reality.