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Walter Price: Twitter heading for 'internet graveyard'

Manager of Allianz Technology investment trust warns social media giant Twitter is in crisis as user numbers stall.

 
Walter Price: Twitter heading for 'internet graveyard'

Social media giant Twitter (TWTR.N) is in crisis and may be about to enter the 'internet graveyard', according to Walter Price, manager of the Allianz Technology (ATT ) investment trust.

Shares in Twitter have fallen 3.3% after the company yesterday reported a $90 million (£62 million) loss for the last three months of 2015.

The period was also the first in the company's history that its number of monthly active users has not grown.

In recent weeks, Twitter revealed plans to actively manage what content appears on its previously chronological newsfeed to widespread user criticism, causing the hashtag '#RIPTwitter' to trend on the site.

'I think Twitter is in a crisis and could be entering the internet graveyard that is populated by many other small internet properties that are used by people and have value to their users but are no longer growth companies,' said Price.

'The issue for all of these companies is that they are still trying to be growth companies, and instead they should be trying to optimise their business and defend their value by creating increased cash flow and profitability.' 

Shares in Twitter have lost nearly a third of their value since the turn of the year, after being caught up in the rout of technology stocks. The sudden departure of four senior executives from the company last month has added to investor jitters.

'The management changes at Twitter and the revolving door at the top of the company is because they think they can grow but everything they try is not really working,' said Price. 

'In our view, the stock will continue to go down until they change their emphasis.'

Tom Slater, who manages the technology-heavy Scottish Mortgage (SMT ) investment trust alongside James Anderson, has also sounded a bearish note on Twitter, despite owning the stock.

Last month he said he was reviewing their investment, fearing Twitter's relatively small scale would make it difficult to compete with internet giants such as Facebook (FB.O) and Amazon (AMZN.O).

Currently on a discount of 8.8%, over five years the Allianz Technology trust net asset value has returned 49.1% and its share price has risen 53.19%.

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