Twitter's (TWTR) COO Adam Bain recently resigned in the latest major executive shakeup at the struggling social network. CFO Anthony Noto will take over Bain's position, and the company has started a search for a new CFO.

Bain, who spent six years with Twitter, was on the shortlist to replace Jack Dorsey as the company's CEO. In a tweet, Bain stated that he was "ready to change gears and do something new outside the company." Does this latest departure spell more trouble for Twitter, which has lost over 50% of its value over the past three years?

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A long history of conflicts

Twitter has been plagued by conflicts ever since its start-up days. Jack Dorsey was the company's CEO during those early days, and led it through two rounds of capital funding. But in 2008, Dorsey was ousted and replaced by co-founder Evan Williams, reportedly due to his weak leadership abilities and tendency to leave work early to pursue other hobbies.

Former Googler Dick Costolo replaced Williams in 2010, and led the company through its IPO in 2013. But after failing to fulfill his promises of growing Twitter's user base and ad revenue as a public company, Costolo resigned last year. Dorsey then returned as CEO, but his time was split between Twitter and online payments company Square (SQ -0.49%), where he also served as the chief executive.

After Dorsey returned, many executives left. This January, Twitter's media head Katie Jacobs Stanton, engineering head Alex Roetter, and product head Kevin Weil all resigned. Weil subsequently joined Facebook's (META -0.09%) Instagram, which was growing at a much faster rate than Twitter, in the same position. Human resources VP Brian Schipper also resigned, and Vine's general manager Jason Toff left to join Google.

A few months later, business development chief Jana Messerschmidt, media and commerce head Nathan Hubbard, and consumer product head Jeff Seibert left the company. Seibert was the fourth person to hold that crucial position since 2014. Instead of trying to reverse the brain drain, Dorsey exacerbated it by announcing several rounds of layoffs. Twitter's India chief quit in early November, fueling speculation that other overseas execs would follow suit. With Bain now also heading for the exits, it seems like Twitter's executive exodus will continue with more high profile departures.

Image source: Getty Images.

What went wrong?

The core problem for Twitter was that it evolved too slowly in the rapidly moving social media market. It gained momentum in the early days as a minimal, microblogging platform, but its 140-character limit (designed for SMS on older feature phones) became archaic after the widespread adoption of smartphones. The platform was a good digital soapbox for celebrities and companies to self-promote themselves, but wasn't as useful as Facebook for connecting users to their friends and family.

As a result, Twitter's MAU (monthly active user) growth peaked. Back in 2013, Costolo claimed that Twitter could hit 400 million MAUs by the end of that year. Last quarter, Twitter's MAUs rose just 3% annually to 317 million. By comparison, Facebook's MAUs rose 16% annually to 1.79 billion in its most recent quarter. Weibo (WB 0.26%), China's micro-blogging equivalent of Twitter, grew its MAUs by 33% annually to 282 million last quarter.

Without decent MAU growth, advertisers spent less money on Twitter. Twitter's revenue rose just 8% annually last quarter, compared to 20% growth in the previous quarter and 58% growth in the year ago quarter.

Many of Twitter's new initiatives failed to impress companies. Letting advertisers pay lower prices for single desired interactions convinced them to pay less money for fewer ads. Curating tweets and stories into "Moments" was an interesting idea, but it was quickly eclipsed by rival efforts like Instagram Stories and Snapchat's Live Stories. Twitter's Fabric mobile app development platform also seemed redundant compared to Facebook and Google's single-sign on solutions.

A failed sale and lots of insider selling

Over the past few months, it looked like Twitter might sell itself. But now that most of those sellers have moved on, the stock seems destined to continue falling as MAU and revenue growth peaks. Cost cutting moves helped it beat earnings expectations last quarter, but downsizing in the face of tough competition could cause more executive departures.

Twitter's insiders aren't confident in the company's future. Over the past three months, insiders sold nearly 257,000 shares on the open market but didn't buy a single share. Bain's departure gives insiders another reason to dump their shares, so investors should steer clear of Twitter stock until the company resolves its ongoing management issues.