Silicon Valley business models have long leaned towards wishful thinking, with venture capitalists and ordinary investors prepared to postpone instant gratification in the hope that a big payday will come one day. Not at Twitter, though. Here, even senior executives appear to have given up hope of profitability, having lost more than $2 billion so far.
The company has admitted: “We have incurred significant operating losses in the past and we may not be able to achieve or subsequently maintain profitability.”
The statement provides the clearest indication yet of the Twitter paradox: despite its immense popularity among celebrities and opinion formers and its ability to dominate the public narrative during live events from bombings to elections to football matches to awards ceremonies, it cannot stop haemorrhaging cash. Worse, the more popular it is, the more it bleeds. It lost $520 million last year alone.
In the ten years of its existence, Twitter has accumulated a deficit of $2.09 billion, according to its form 10-K annual report, which has been filed with the Securities and Exchange Commission. Despite increasing revenue from $28.3 million in 2010 to $2.22 billion ilast year, Twitter said in the filing: “We expect that our revenue growth rate will slow in the future as a result of a variety of factors, including the decline in the growth rate of our user base.”
The company also admitted that, although heavy investment would be needed to keep its services working and to develop functions, not to mention to hang on to staff, “these investments may not result in increased revenue or growth in our business”.
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It’s grim, despondent stuff. The report contains the expression “we may not be able to” 15 times.
The shares sank below $20 in January, down from a high of nearly $75, and are showing no sign of perking up.
The company warned investors that share price volatility meant that “you could lose all or part of your investment”. It added that share price appreciation “may never occur”.
Twitter’s shares fell 43 cents to $17.68 in early trading yesterday in New York.