Twitter’s turnaround

hinges on Dorsey

Twitter is all about short and sweet, but its turnaround looks like it will take some time.

The company released its third-quarter results this past week, and they highlight how complicated things have become. User growth is weak. And even though revenue gains are strong, Twitter has yet to turn a profit — ever.

All eyes are on CEO Jack Dorsey to change the trajectory. Dorsey, a company co-founder, came back with the aim of making the messaging service more appealing to the masses and making some profits while he’s at it.

Dorsey’s CEO appointment became permanent a month ago, and he has already cut jobs, introduced new features and given away stock to motivate remaining employees. Dorsey’s arrival created a spike in confidence and subsequent rally in its stock. But Twitter shares have since resumed falling, after its third-quarter results dashed hopes for a quick fix.

“It is difficult for investors to look past the empirical results at hand,” says Nomura analyst Anthony DiClemente. “While investors are hopeful that restructured leadership can engineer a revival... as long as Twitter user growth remains stalled, it will be difficult for revenue to reaccelerate, muting the (three- to five-year) growth outlook.”

Adding to investor skepticism, the company gave a weak forecast for its current quarter. And there is concern Dorsey’s attention is divided — while retooling Twitter he is also serving as CEO of Square, a payment processor that is preparing to price an initial public offering of its stock.