Following the departure of former Chief Operating Officer Ali Rowghani and head of Twitter news efforts, Vivian Schiller, Twitter, Inc. (TWTR) witnessed the departure of some more top brass. According to latest reports, the company’s lead of Analytics, Adam Kinney, and VP of Engineering, Jeremy Gordon have handed in their papers in response to a dispute over the executive team’s strategy.
Following the news, Twitter’s share price dropped nearly 4% on Wednesday. While the company is struggling to improve engagement, which is leading to stagnation in its business growth, internal management issues continue to make headlines making the company’s growth outlook bleak.
Reportedly, Gordon announced the end of his two-year tenure at the company through a tweet. In the case of Kinney, however, CNBC flashed the news, though there was no public announcement from the company. We believe that these departures were the result of the slowdown in Twitter’s user growth.
However, Twitter’s ability to attract advertising revenues, despite significant competition from Facebook (FB), Weibo and market leader, Google (GOOG), will be a key factor determining its growth.
Recently, the company reported robust growth in advertising revenues in the third quarter that was driven by a 150% year-over-year surge in ad engagements, reflecting higher quality ads. Timeline views increased 14% year over year to 181 billion. As a result, revenues soared 114.3% to $361.3 million on a year-over-year basis.
However, the company continued to report a loss, though much narrower than in the year-ago period. Hence, we believe that the impact of any adverse news from management would likely weigh on the company’s market valuation, which is already trending downward given the growth concerns.
Currently, Twitter has a Zacks Rank #2 (Buy). A better-ranked stock in this sector is DTS Inc. (DTSI), which sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment