The Cynic’s Case For Twitter

Date: 01/14/2020
Author: Mr. X


Yes, Jack is still Master of the Universe.

You must admire the audacity of Jack Dorsey. He bans the President of the United States from his platform and seemingly understands that nothing will happen to him. Then, almost immediately afterward, Uganda bans Twitter for alleged interference in elections, and Twitter posts:

One is tempted to remember that hubris brings nemesis. However, there’s good reason to believe Twitter [TWTR] will remain strong and get even stronger in the year to come. After all, the complaints about hypocrisy are still being posted on his platform.

First, President Donald Trump was a unique case, and Mr. Dorsey handled it with excellent timing. He profited from (and arguably enabled) POTUS’s rise to power but dumped the account when there was no danger that President Trump could do anything about it. Some House Republicans voted to impeach President Trump and others in the Senate reportedly would do the same. Of all people, it’s Liz Cheney who is garnering a Strange New Respect from mainstream publications as the voice of moderation and probity in the post-Trump GOP.

In other words, there’s little danger that Republicans are going to become economic populists. Senators Josh Hawley and Ted Cruz were starting to trend into dangerous territory for Big Tech, but they are scrambling to distance themselves from the riot last week.

Banning President Trump also wins Twitter a stay of execution from resurgent Democrats. For all the conservatives angry that Twitter censors too much, there are far more liberals who think Twitter needs to do more to stop offensive and hateful speech on the platform. With the largely symbolic act of toppling POTUS, Twitter is taking a stand without having to wade into a larger question of what speech it will and will not tolerate. Twitter will simply make it up as it goes along, and it will be allowed to do so.

Second, there is no competition. Parler was utterly obliterated by major tech companies, service providers, and even its lawyers. Social media is, by its nature, a natural monopoly. A niche service will inevitably draw users that could be painted as extreme, which will scare off companies who want to keep good press (and their contracts with bigger companies.) With Parler removed, Twitter remains as the last mainstream platform that corporate America, politicians, and celebrities will use consistently.

Finally, with 2020 in the rear view, Twitter will be better able to focus on monetization. Corporations have largely assimilated the cultural trends of the last year, making big donations to progressive groups and benefitting from good press. President Joe Biden is relatively moderate on economic policy. While there will be plenty of culture war battles for Republicans and Democrats to fight over in the press, the underlying structure of the economy won’t change.

In short, Twitter will be a safe space of movie trailers, celebrity views, product “unboxings,” and artificial controversies. It will be a reliable way for global corporations to advertise their carefully tailored public relations campaigns, without having to worry about underground efforts disrupting them.

“All anxieties tranquilized, all boredom amused,” and, perhaps most importantly, all trolls banned.

Other analysts are noticing this opportunity and Twitter snapped an almost weeklong losing streak, posting modest gains on Thursday. With other analysts projecting targets between $58 to $60, there’s a significant opportunity here for those who see the depressing conclusion that the Masters of the Universe really do run this thing.

There may be a great technological disruption that is enabled by decentralized finance and blockchain technologies. We might even see state-action level trolling or disinformation if Russia or China sets up a “free speech” site for disgruntled Americans. However, neither of those things are likely to happen in the immediate future. More importantly, the consumer base that Twitter can monetize will remain addicted to the timeline, processing the approved storylines, narratives, and marketing campaigns that will be sent their way.

Is this a cynical take? Absolutely. But it’s also hopeful because it’s one you can profit from. In the Biden Administration, expect to see Big Tech and government working together. Business as usual means consistent returns for investors – and a chance for Twitter [TWTR] believers to buy in at the dip.

Meet the new boss, same as the old boss. You might as well get your share.

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