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Media

Should Twitter Give Its Cash Back to Investors?

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By Douglas A. McIntyre Updated Published
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Should Twitter Give Its Cash Back to Investors?

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After poor earnings, shares of Twitter Inc. (NYSE: TWTR) fell 13% to $15.40, which is barely above its all-time low, as well as down from $51 per share a year ago. Its market cap now sits at $10 billion, which seems impossibly high given its performance. The social media company has a chance to salvage investor value by returning the $3.5 billion on its balance sheet and auctioning off the company.

The special one-time dividend followed by a sale would guard against more valuation destruction based on another share drop. And that is likely to happen. The company forecast revenue in the current quarter to be as low as $590 million, much lower than expected numbers. This would be about the same as in the quarter just posted, in which Twitter lost $80 million on $594 million in revenue. That revenue was up from $436 million last year.

The other sign that Twitter is in its death throes is that the number of average monthly users rose only 3% from the same quarter last year to 310 million. Its user growth rate is over.
[nativounit]
Twitter has cash, and that is about all that can be said about shareholder value.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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