Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Bottle-Rocket Growth Won't Last Forever

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

According to Web audience measurement service QuantCast, Twitter has stopped growing. After peaking at 24.4 million U.S. visitors per month, the traffic has died down to about 22 million. That's an abrupt about-face for a service that blossomed from 1.4 million readers to those 24 million in a matter of about five months.

Oh, Fail Whale, where are you now?

Take a deep breath
OK, one data point from a single source is hardly a death certificate for the hugely popular microblogging site. Twitter is not going to backpedal, shrink, and die from here. But it's enough to make you sit up and think about the concept of massive growth and what to expect from those bottle rockets.

Microsoft (Nasdaq: MSFT  ) used to be the standard example of a growth stock. The S&P 500 index was a four-bagger in the 1990s -- but Microsoft crushed it with a nearly 10,000% rise in split-adjusted share prices. Now, Mr. Softy has grown up. Sales have merely tripled in the last 10 years and net income never even doubled. The stock price is down more than 60% in this millennium, underperforming the S&P's 40% swoon. Microsoft pays a quarterly dividend now. This is a value stock these days, or even a dividend income stub.

Other legendary highfliers, like Starbucks (Nasdaq: SBUX  ) and Google (Nasdaq: GOOG  ) , have largely followed the same pattern: massive growth in every metric that matters -- up to a point. As these market darlings face the cold, hard realities of mathematics, they stop doubling every six months or whatever their early rise may have indicated. 

And that's where the stocks stop, drop, and roll.

Twitter isn't even public yet, but has already run into a glass ceiling of sorts. Maybe it's just a seasonal effect with schools ringing out for summer and everybody leaving their twitterrific Apple (Nasdaq: AAPL  ) iPhones or Research In Motion (Nasdaq: RIMM  ) BlackBerrys on the beach towel for a quick swim. The summer months tend to slacken Web traffic considerably as everyone gets some sun. Twitter's growth might -- might -- pick up again in September.

Dollars and sense
Just how much value would there be in a Twitter IPO? Multibillion-dollar estimates seem to assume astronomical growth for years to come, but Twitter has no real revenue model yet, and 22 million users won't pay the pied piper with that sort of valuation.

How about Facebook? It's one of the most popular sites on the Web today with more than 90 million monthly visitors, and with early round investments from Microsoft and others that would imply a $10 billion valuation or more. And Facebook does make some money from advertising, unlike Twitter. But it ain't no Google-like marketing powerhouse. Facebook probably will go public eventually, but it'll take years to figure out exactly what it's worth. I'm not touching that IPO, when it comes around.

Further fast-growing Foolishness:

Stock news, financial commentary, and your daily dose of Foolishness: Get plugged in to The Motley Fool on Twitter!

Google is a Motley Fool Rule Breakers selection. Apple and Starbucks are Motley Fool Stock Advisor picks. Microsoft and Starbucks are Motley Fool Inside Value selections. The Fool owns shares of Starbucks. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like. The Motley Fool is investors writing for investors.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 918165, ~/Articles/ArticleHandler.aspx, 10/22/2016 8:07:44 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 22 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
MSFT $59.66 Up +2.41 +4.21%
Microsoft CAPS Rating: ****
AAPL $116.60 Down -0.46 -0.39%
Apple CAPS Rating: ****
BBRY $7.37 Down -0.11 -1.47%
BlackBerry CAPS Rating: *
GOOGL $824.06 Up +2.43 +0.30%
Alphabet (A shares… CAPS Rating: *****
SBUX $53.63 Up +0.04 +0.07%
Starbucks CAPS Rating: ****