- Jack Dorsey (Twitter’s current CEO) mentioned in an interview that there are no plans to expand the character limit.
- Given weakening user growth, it seems somewhat startling that Twitter is rethinking its strategy.
- I’m now revising my stance on Twitter from a buy to a hold, as there’s no meaningful catalyst to user growth.
It seems like Twitter (NYSE:TWTR) is going to stick with its 140-character limit. I think it’s unusual that Twitter sustains an ethos of backwards thinking, as the company needs to develop a renewed strategy to drive engagement growth across its social platform.
On NBC’s “Today” show Friday, Dorsey said the company has no plans to expand the 140-character limit, which dates back to Twitter’s launch in 2006. “It’s staying,” he said. “It’s a good constraint for us, and… it allows for of-the-moment for everything.”
As such, it seems that Dorsey’s notion of a “good constraint” only serves to differentiate the social platform, but it doesn’t provide the level of reach or quality of engagement that other competing social networks provide. I also believe Twitter could have stood a better shot at reducing content spam by increasing the Tweet length. What's more, it seems probable that the company will not improve its positioning on search results because the length of Tweets is rather short and doesn’t provide the same level of quality content when compared to Facebook status updates.
Twitter does plan on maintaining the 10,000-character limit for direct messaging, which increases quality interactions on a peer to peer basis. However, these direct messaging capabilities are more or less in-line with competing messenger apps, and quite frankly, I find that WhatsApp and Facebook Messenger are much better positioned in the online messenger space, so expecting Twitter to become a major destination for its messenger service stretches beyond optimistic thinking. As for tweets, the 140-character limit for tweets clearly hasn’t been a recipe for mass market adoption.
Twitter’s MAU metrics are currently struggling, and I believe that the issue starts with the limitations of the platform. Currently, Twitter link spams and is primarily used as a platform for self-promotion, or basically a content referral service provided every internet user is tech savvy enough to leverage the newsfeed correctly. Of course, this hasn’t occurred quite yet, which is why the United States has remained stagnant at 65 million monthly active users for 5 consecutive quarters now. When aggregating both the United States and International there was barely any sequential growth, so drastic changes should have been made to the core platform a year ago. Instead, Jack Dorsey came into Twitter only to maintain the status quo and brag about improving ARPU metrics even as investors face the risk of deteriorating audience metrics a couple quarters in the future.
I wrote extensively about this in my prior Amigobulls article as there’s meaningful potential in lengthening tweets, as it would improve the engagement rates on the mobile app and on the web browser.
By maintaining the 140 characters limit, it seems fairly probable that the length of time spent on Twitter will remain at similar levels, as users will often exit the site via the limitless number of referral HTML links to other sites. To maintain higher engagement on the platform the company needs to give a reason for users to spend more time on the app as opposed to the numerous content providers on destination sites. However, given the current culture, such a shift seems highly unlikely. After all, Twitter would have to directly compete with Facebook, which would provide an overlapping service that would compete directly with the largest social network.
I still think Twitter is differentiated enough even if they were to implement longer tweet character lengths, so I come away unimpressed overall. I’m rethinking my optimism on the company, as further deterioration in the share price will likely result from weakening audience metrics. The company is extremely stagnant on user engagement, and while revenue growth has helped to mask this. There are limitations to simply jacking up pricing on ad units, or increasing ad load.
Maintaining the status quo is the maniacal wisdom that led to the decline of Kodak, Xerox, Sony, and even Apple at one point. Why Twitter isn’t so progressive after witnessing such a massive drop off in growth is baffling. All the innovation when pertaining to ad technologies isn’t going to save the company if users never find useful content within the app. As such, I’m worried about the current growth trajectory of the company, and I’m now downgrading the stock from a buy to a hold.
You can also see Amigobulls' Twitter stock analysis video for a quick roundup of key financials.