Twitter, All Grown Up, Gets a Place in the S&P 500

By Douglas A. McIntyre Updated Jan 11, 10:47PM EST · Published Jun 5, 6:35AM EDT

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Twitter, All Grown Up, Gets a Place in the S&P 500 — © Wikimedia Commons

As Monsanto exits the S&P 500 due to its buyout from Bayer, Twitter Inc. (NYSE: TWTR) will replace it. In a sense, Twitter has earned the reward of a spot in what may be the most widely traded index in the world. Its financial performance has been a disaster, but its share price is up sharply in the past two years.

Twitter currently trades near $39, which is up 170% from two years ago. The S&P 500 is up 31% for the same period. The stock’s performance over a five-year period is much worse. However, the recent run has taken the company’s market capitalization to $28 billion, almost as much as Fiat Chrysler’s. Of course, investors believe Twitter’s growth will outpace the car company’s by a wide margin.

The selection of Twitter was announced by S&P Dow Jones Indices, which makes these decisions.

Twitter’s numbers in the most recently reported quarter were good but not spectacular. Revenue rose to $665 million. Twitter made a profit of $61 million, compared to a loss of $62 million a year ago. Investors were upset by Twitter’s monthly active user growth. The figure rose from 330 million in the fourth quarter of last year to just 336 million in the first quarter of 2018.

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Twitter’s numbers get compared to Facebook Inc.’s (NASDAQ: FB), which may not be fair, but it is the case nevertheless. Many people skeptical about Twitter’s future say its growth period is completely over. They also say that advertisers will never flock to Twitter but will use Google, Facebook and more traditional media. Twitter’s recent performance has not proven them wrong.

The S&P 500 does include scores of underperforming companies, ranging from manufacturers and retailers to tech companies and other social media. Twitter did not get added to the S&P 500 for its performance. Someone at S&P Dow Jones Indices needed to make a decision, and Twitter drew the right straw.

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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.