Twitter is not a “social network”


So the long-awaited day came when all of the IPO coaching from Goldman could no longer hide the truth, and the people who’ve been saying that Twitter is overvalued rushed to sell.

It naturally was overvalued, so a correction was of course due, but the metric that drove the sell-off was the wrong one. User growth for Twitter should not be the governing metric. Twitter will never reach the 1.2 billion users of Facebook. Neither should they. This is what happens when all “social networks” are put in one pile and measured against each other. Instagram, Twitter, Facebook and Snapchat are fundamentally different products. Twitter is not a “social network” – it is a media company. It is used by people who would earlier have gotten their news from TV or print. As many have pointed out, it is not a mass product. It is not as crowd-pleasing and easy-to-get as e.g. the photos on Instagram.

Twitter has lots of interesting initiatives coming up, and will be a sure revenue-generator through advertising revenue and media tie-ins. Its valuation should be more that of a robust and growing media company, with revenue growth the metric to look at. The main worry then with the report was the fall in timeline views. That’s the one we need to keep an eye on.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s