The internet really, really wants Twitter to be acquired.
The company’s share price rose more after the Microsoft/LinkedIn deal than it has in the year since Jack Dorsey took over the company, indicating that investors are more excited about a potential acquisition than they are the new CEO.
But all is not lost for the social platform.
Investors say Twitter has just half a year to improve before it’s too late.
“Twitter has been making many changes to hopefully inflect user growth in the back half — if it is unable to do so, we think M&A in 2017 would be inevitable,” Robert Peck, an analyst at SunTrust Robinson Humphrey, said in a note to clients.
Analysts from BMO Capital Markets, Pacific Crest Securities, Axiom and more have also said a Twitter acquisition looms near if the company doesn’t turn itself around.
So what does turning it around look like?
Mostly, it’s more users. Twitter was just passed by Snapchat in daily active users and still pales in comparison to its big brother Facebook. As Peck pointed out, user growth is the key to avoiding an acquisition.
But more than that, it’s about convincing investors and the media that the company knows how to handle itself.
Scrolling through Twitter’s blog shows that the company has been making significant changes, but Twitter pundits are still bearish. The changes have not been enough to change the narrative Twitter is trying to weave.
All of these are improvements that Dorsey has implemented since returning to the helm of the company in July of 2015.
- Stickers on photos, which would bring the company up to par with other messaging platforms, and potentially form a new source of revenue with premium sticker packs
- Improvements in tagging other users and adding links to tweets, simplifying the “secret handshake” nature of the platform
- Connect, which lets users discover new accounts based on their interests and the people they follow on Twitter
- A faster way to direct message other users
- Improved, if not perfected, ways to report harassment
- An algorithmic timeline, prioritising importance and popularity instead of the time a tweet was posted
- Better usability for people who are not signed into the service
- A native GIF search function
- Moments, which brings together popular tweets about a single subject into once place and makes it easier for users to follow live events and find new accounts to follow
Now that he has been in charge for an entire year, the changes he has made are plentiful but the problem he inherited still remains: None of the changes have yet convinced more people to use Twitter.
Moments, the Connect Tab, and the improved homepage for logged out users are all steps in that direction, but the stagnant user numbers mean that none of it really matters.
Twitter is expected to release its earnings later this month, and the number of daily and monthly active users needs to grow. If it is to successfully change its story, it has to add users, in almost any amount.
The company has shown it has the appetite to make changes to attract those users, it just hasn’t quite found the combo that will bring the masses running to join.
If it can’t figure out what that right combo is, Twitter’s days as an independent company may be numbered.