Welcoming your next podcast challenger, Twitter — who acquired the social podcasting app, Breaker, on Jan. 4.

This move follows bigger tech companies’ expansion into podcasts:

• Over the past two years, Spotify has spent over $800m on podcast content and creator tools.
• Just last week, Amazon purchased Wondery, a podcast producer for ~$300m.

Sike… This really isn’t a story about podcasts

Twitter’s plans for Breaker goes beyond podcasting. Twitter announced that it would shut down Breaker and move its team to work on Twitter Spaces — a live audio chat room inside Twitter which began beta testing in Dec.

Over the past 7 years, Twitter, the text-heavy social-media app, experimented with video and audio with little success:

• Acquired Vine, a social media for short-form video in 2013 to only shut down the service in 2016.
• Acquired Periscope, a video streaming app, in 2015 — which will also be shut down by March 2021.

Where Facebook succeeded in growing through acquiring other social media apps, Twitter failed.

When 70% growth isn’t good enough

Since its IPO in 2013, Twitter’s stock is up a mediocre 29% from its opening price. After its IPO, user growth slowed and Twitter failed to monetize its audience in the same way that Facebook did.

But Twitter’s fortunes took a turn in 2020 as user and revenue growth began to pick up from new initiatives:

• Re-built its advertising tools, which advertisers use to buy ads, with a goal of increasing revenue.
• Launched new products to drive engagement including Fleets, an IG story copycat, and threads.

This led to a 70% growth in its stock for 2020, one of its strongest performances in 2 years. But what’s 70% compared to competitors, PinterestPINS

and SnapSNAP

, which both increased more than 200% in 2020.

For investors… Here we go again…

According to technology investor, Ram Parameswaran, only two things matter in an ad business:

1. Number of users
2. Quality of its ad tools to serve advertisers

Twitter’s doing all the right things but the company has taken investors on a rollercoaster ride for 7 years.

The concern for investors: How much of its recent growth in users is a result of consumers flocking to social media apps during COVID? Unless Twitter can prove that its user growth is here to stay, investors should be cautious of this turnaround story.