Twitter SWOT Analysis

Company: Twitter, Inc.
Founders: Jack Dorsey | Evan Williams | Biz Stone | Noah Glass
Year founded: 2006 CEO: Jack Dorsey
Headquarters: San Francisco, California, United States
Employees (Dec 2019): 4,900
Ticker Symbol: TWTR Type: Public
Annual Revenue (Dec 2019): US$3.46 Billion
Profit | Net income (Dec 2019): US$1.47 Billion

Fun Fact: 44% of the total, 1.3 billion, Twitter accounts created since the company was founded were open and remained dormant until they were closed without sending a single tweet.

Twitter is a social media and micro-blogging platform that enables online interaction through tweets. From zero users to over 330 million users in less than 15 years, we can learn a lot from Twitter SWOT Analysis.

Twitter’s Strengths

1. Highly InfluentialTwitter’s hashtags are the most influential and impactful features offered by any social media platform. Hashtags can mobilize communities, overthrow governments, and address injustices. From the #MeToo Movement to #FakeNews and unity behind a boy’s nuggets under #NuggsforCarter, Twitter has proven its influence and impact time and time again.

2. Loyal Customer BaseWith 166 million daily active users (DAU) (worldwide quarterly average) in quarter 1, 2020. The most loyal customers will never exchange Twitter with any other platform come rain or shine.

3. Strong Market ShareTwitter is one of the biggest micro-blogging and social media platforms in the world in terms of market share. Twitter is a force to reckon with and can leverage its position to advance its interests.

4. Popular for News and MarketingTwitter has transformed into an official communication channel. Information is conveyed quickly and easily as a simple tweet. From communications by governments like the White House to famous personalities and businesses. According to Statista, 67% of businesses rely on twitter for business-to-business marketing (worldwide).

5. Stable Financial PositionTwitter’s financial position has stabilized as the company attained maturity.
In the fiscal year 2019, Twitter hit $3.46 billion in annual revenue for the first time.

6. Broad Product PortfolioTwitter has made several strategic acquisitions. These companies have enhanced twitter capabilities to serve its customer base.Some of its biggest acquisitions are as follows:

Periscope – live video streaming
Magic Pony – machine learning
Gnip – API aggregation
MoPub – mobile advertising
Lightwell – conversation initiatives
TellApart – advertisement
TweetDeck – dashboard application
TapCommerce – targeted advertisement

7. Innovative and fun featuresFrom trending topics to hashtags and retweets, Twitter offers the most innovative and useful features. These features not only convey the latest information but also allow users to respond and convey their thoughts.

8. Brand and Name RecognitionTwitter has a perfect name; it is memorable and conveys perfectly what the company does. Just from the name Twitter, consumers know what it is and what it does.

Twitter’s Weaknesses

1. AlgorithmTwitter has been struggling to fine-tune its algorithm to satisfy its users. Users have been dissatisfied with Twitter’s search functionality, timeline, irrelevant/fake tweets, and harassment/ abuse. If Twitter does not invest in product innovation, soon it will lose its value proposition.

2. Overreliance on US MarketEven though Twitter engages globally, it relies heavily on the US market. The following breakdown shows Twitter’s 2019 annual revenue from different geographical regions:

USA: $1.9 billion (56%)
Japan: $537 million (15%)
Rest of World: $978 million (29%)
Total: $3.45 billion (100%)

3. Overdependence on AdsIf we look at Twitter’s business model, a large portion of Twitter’s revenues come from advertisements. For example, in 2019, 86.5% of its annual revenue comes from advertising services, and rest 13.5 % comes from data licensing services.

4. Lack of DiversificationTwitter has put all its resources, aspiration, and future in social media networking. Twitter solely relies on its social media platform and doesn’t diversify. If a new technology emerges and replaces social media platforms, the company will fade into oblivion within a short period.

5. Burdening Operational CostsTo fend off competitors, Twitter spends more. To satisfy the growing number of users, Twitter invests more in the expansion of data centers. All these spending and investments lead to an increase in operational costs, which threatens profitability in the long run.

6. Fake accountsTwitter reports that about 5% of its daily active users (DAU) are fake or spam accounts. If these spam/ malicious accounts continue to grow, Twitter’s reputation can be hugely impacted.

7. Data Safety ConcernsTwitter mishaps in the protection of users’ data led to breaches and leakage of users’ private information. Also, the company inadvertently hands over users’ information to advertisers and later addressed the problem in September of 2019.Here is the statement from Twitter on personal information:“We recently discovered that when you provided an email address or phone number for safety or security purposes (for example, two-factor authentication), this data may have inadvertently been used for advertising purposes.”“When an advertiser uploaded their marketing list, we may have matched people on Twitter to their list based on the email or phone number the Twitter account holder provided for safety and security purposes. This was an error, and we apologize.”

Twitter’s Opportunities

1. Online StoreBusinesses are already marketing their products on twitter. It would be a great value add to offer virtual stores or marketplace to sell directly to users like Instagram.

2. Feature EnhancementInstead of one-size-fits-all platforms, Twitter can offer personalized offerings to entice different generations and businesses. For instance, providing features and tools such as TikTok to entice Gen-Z.

3. Offer Remote Working SolutionsThese uncertain times have prompted companies to adopt remote working solutions like Zoom and Microsoft Teams. Twitter has the infrastructure, know-how, and resources to offer remote working solutions and tap into the demand from users to work from home.

4. Enter into Music or Video Streaming ServicesWith vast financial resources at its disposal, Twitter can enter into lucrative markets through the acquisition of medium companies operating in the market. For one, music and video streaming businesses can offer opportunities to grow.

5. Increase User SatisfactionTwitter can keep its users satisfied by taking actions in the following areas:

Reduce abuse/ harassment
Combat fake news/misinformation
Protect the integrity of election-related conversations

6. Focus on Mobile-Based AdsMore consumers access Twitter using mobile devices. To increase ad revenues, Twitter should focus on mobile-friendly ads, especially with the expansion of its user base in the emerging markets.

Twitter’s Threats

1. Stiff CompetitionFrom old competitors like Facebook, Snapchat to new social media platforms like TikTok, strong competitors can steal users from Twitter. This a serious threat since the increase in the number of users in the next five years is projected to be very slim.

2. Suppression of Freedom of SpeechAuthoritarian and military governments, as well as dictators, hate any tool that can be used by the masses to overthrow them from power and can impose a total ban on Twitter.Democracies can also restrict Twitter to curb freedom of speech. For example, Twitter is officially blocked in China, and the New York Times reports that Chinese police officials are questioning and detaining twitter users.

3. Investors’ PressureCurrently, Elliott Management Corp, Twitter’s biggest investor, is pushing for the removal of Founder/CEO Jack Dorsey. Friction and conflict between investors and management are always bad for business.

4. Unequal Power to Influence:According to Pewresearch, the top 10% of users are responsible for 80% of the total tweets. Twitter is designed to offer influence based on the number of followers.For example, Kylie Jenner (with 34 million followers) and Cristiano Ronaldo (with 84 million followers) send out multiple tweets daily, influencing hundreds of millions of people. This has led to the unequal distribution of power to influence.

5. Influencer Quitting the platformAt any point, an influencer can leave twitter and go to another competitors’ platform. It can possibly lead to the mass migration of followers and impact Twitter’s revenue/user base tremendously

6. New Digital TaxesThe EU is targeting the top tech firms with a new digital tax. If Twitter is included in the list, a portion of its revenue will be directed to taxes.

7. Regulatory LawsRegulatory bodies can enact stricter rules and regulations to improve data safety, protect intellectual property rights, and eradicate fake news, insensitive content, and misinformation. These regulations can lead to mass migration from Twitter.

8. Twitter has lost its coolTwitter is designed as a one-size-fits-all platform and lacks personalization. For instance, most Gen Z prefers TikTok because they can customize favorite videos, and millennials use Facebook and Instagram for easy utilization of different media, which leaves Twitter with older generations. This makes Twitter’s future dim and uncertain.