Twitter Confirms New Investment Round, But Has It Already Peaked?
Twitter just announced that the rumors were indeed true and that it has just closed a "significant round of funding" from a group of five investment firms. While Twitter didn't disclose the actual amount it received today, the Wall Street Journal reported yesterday that Twitter was going to close a $100 million round which would put Twitter's valuation at around $1 billion. At that time, however, the assumption was that up to seven firms were going to be part of this deal. Chances are that today's round is slightly smaller than the rumored $100 million.
Has Twitter Peaked?
At the same time, though, the latest data from Hitwise shows that visits to Twitter's main domain have slowed down markedly over the last few weeks. This number doesn't take users into account who access the site from third-party applications, but it does show that a smaller number of users are going to the main site, which indicates a slowdown in new user adoption. Hitwise's Bill Tancer also found that fewer users are searching for Twitter on search engines. Hitwise's Clickstream report also shows a drop-off in new users that are coming to Twitter since April.
In April, of course, Oprah famously joined Twitter and the hype cycle around the service was in full swing. It looks like normality might be setting in now and growth is indeed slowing.
The question, of course, is if this is just a temporary slowdown or part of a larger trend. Maybe everybody who was going to join Twitter has already joined and the rest of the potential users are simply happy to use Facebook instead?
For now, we want to congratulate Twitter on closing this round, which will give it a chance to improve its technology and grow its team. At the same time, though, we also hope that Twitter will finally release some details about how it plans to make money in the long run and validate this valuation.
Share
Facebook
Comments
Subscribe to comments for this post OR Subscribe to comments for all ReadWriteWeb posts
1 billion ! are you kidding me youtube is worth 1 billion twitter is futile http://blastoffpress.com
Yep. I prefer facebook. Twitter is simply redundant for me.
I think Twitter is on the Gartner Hype Cycle - it grew super fast and peaked in the spring of this year. I'd say that most of those that jumped on the speeding bandwagon have fallen off in the "trough of disillusionment".
I'm expecting a gradual increase in take up (slope of enlightenment) as people get realistic.
So many of my colleagues would benefit if they "got it" - I still think there is another peak comming - maybe in the spring of 2010.
I use to be an avid Twitterer and have found myself using the service less and less. Looks like Facebook was successful with their status update initiatives, because I use that feature more than Twitter these days.
I went on a bit of a rant earlier today.
http://vocal.ly/pgg
The last paragraph speaks to the investment.
"it looks like Twitter has raised another $100m. I think on the surface, it’s a mistake. On the other hand, the investment itself is strategic....."
I've noticed the slow down for Twitter since the beginning of August. Downloads for the Twitter Toolbar I developed had maintained at least 50 downloads a day from my site for months prior. Then I started noticing the slow down. Now it averages about 35, and only occasionally hit 50 or more downloads. A thing to note here is most of those download visitors were coming from Twitters wiki. The link is still there, just not the visitors as much.
I can't speak to whether Twitter has peaked, especially since that data is focused on Twitter.com and not the whole Twitterverse.
Relative to the fund raise, though, for Twitter (and Twitter's investors), this makes a lot of sense if one assumes that they roll up the choicest portions of the third-party twitter ecosystem into their core (through M&A), refine their API approach to this newly aggregated/federated platform and then cultivate a deeper, richer ecosystem around same.
Then, when the tree needs a good "pruning" again, start the M&A process anew.
For more fodder on this one, check out:
Twitter Financing: Pruning the Garden with $100M Shears
http://bit.ly/1902st
Mark
There's a reason why they haven't put up any ads because then they'll have to release financial figures. And it's gonna be ugly. Very ugly. Twitter is a mix between a social network site and a chat service so click-thru rates are gonna be crappier than crap.
They can keep looking for a revenue model, but it'll eventually come down to subscriptions, ads, or both. And none of them will be pretty. Meanwhile, by keeping the revenue out of the picture, they can sucker in as many dumb investors as they can.
I think Mark above makes a great point... Just because www.twitter.com has found visits to that site have reached a plateau doesn't mean that twitter as a communications method has necessarily slowed (it might have, I'm just saying that the facts aren't all there).
With the number of clients & devices that you can access twitter through increasing, and uptake of those services rising daily, it's perhaps no surprise that less people are accessing the 'standard' site.
Only if you looked at the volume of traffic through all the different ways that people use twitter will you get a scale of use. On the face of it, this methodology is a little like trying to just use hotmail & gmail to judge how much people are using email.
Maybe twitter will get absorbed into a bigger app like Facebook...
RT @Margaret, same to me: "I use to be an avid Twitterer and have found myself using the service less and less. Looks like Facebook was successful with their status update initiatives, because I use that feature more than Twitter these days."