Twitter May Be On Shaky Financial GroundBy: Shaylin Clark - March 9, 2012
Everybody knows Twitter is in great shape, right? Everybody these days has a Twitter account. Twitter has played major roles in breaking news stories, been used to coordinate protests in countries from Egypt to Iran to America, and is unparalleled as a tool for telling your friends what you’re having for lunch (never mind being the best platform ever for watching celebrities put their feet in their mouths). Twitter is buying third party app developers left, right and center. Heck, they were even putting Twitter hash tags at the end of commercials during the Super Bowl. These are not the signs of a company in trouble.
And yet, leaked financial data published by Gawker this morning suggests that Twitter’s impressive image might be a façade covering up serious financial troubles. To put it simply, Twitter just isn’t profitable. While Twitter took in revenue of $23.8 million in the first third of 2011, their expenses far exceded that for the same time period, to the point that they actually lost $25.8 million during that time. That continued the trend set in 2010, when Twitter posted $28.5 million in revenue but a $67.8 million loss.
Not being a publicly traded company, Twitter is not obliged to make its financial data public, so only Twitter’s execs and their investors – of which there have been several lately – know for certain. While Twitter’s current revenue situation is unclear – bear in mind that Gawker’s figures look to be about a year old – there’s little reason to believe that Twitter has had a massive influx of revenue since then, apart from what investors have contributed. At the same time, though, Twitter continues to buy third party app developers like TweetDeck, and continues to hire new employees. Gawker’s data suggests that the company has doubled its number of employees in the last year.
Of course, Twitter’s situation is hardly hopeless. They maintain a unique place in the social media, both in the kind of service they offer and in the role they play in modern culture. The big question remains whether they can take that unique position and actually use it to turn a profit.
A request for comment has been sent to Twitter, asking for clarification about Gawker’s data and Twitter’s current situation. They have not yet responded.