In case you missed it, it's no longer purely speculation that Twitter (NYSE:TWTR) is considering dropping its 140-character limit -- it's a fact. Last week, CEO Jack Dorsey admitted in a tweet, which included a screenshot of far more than 140 characters, that the company is serious about potentially removing the limit. When could this move happen? As early as March, according to Re/code.
Why Twitter is considering big changes
The pressure for Twitter to begin making big changes started mounting in the first half of 2015 when the social platform's monthly active user growth appeared to be stagnating.
It's easy to see why Twitter's paltry 1% sequential growth in monthly active users in Q3 is concerning when you compare the platform's growth to larger peer Facebook (NASDAQ:FB). Facebook's monthly active users increased 4% sequentially during Q3. Furthermore, Facebook's other social properties -- Messenger, WhatsApp, and Instagram -- now have 900 million, 800 million, and 400 million monthly active users, respectively -- all significantly larger than Twitter's 320 million monthly active users.
Worries kicked into high gear when Twitter announced in June that CEO Dick Costolo was stepping down. The CEO's resignation signaled that stagnating user growth must have been more than a temporary storm, but instead a deeper, intrinsic problem. Indeed, returning CEO and co-founder Jack Dorsey confirmed the problem was real in a statement in the company's second-quarter press release. "Our Q2 results show good progress in monetization. But we are not satisfied with our growth in audience," Dorsey admitted shortly after he was given the interim CEO title but before he was elected permanent CEO.
Since Dorsey took on the role of permanent CEO in October, the CEO hasn't impressed. Its Moments feature and a planned advertising campaign that was supposed to begin attracting the untapped masses both appear overhyped in hindsight. As a result, the stock has plummeted, falling 37% during the last three months, leaving the stock trading around $18 -- well below its IPO price of $26.
And the stock's falling share price is so severe that it, in and of itself, is now perhaps the biggest source of pressure on the company.
No wonder Twitter is turning over every stone as it searches for a way to overhaul the service in a way that stays true to its most loyal users while also attracting a larger audience.
A huge risk
While the company may be considering allowing much longer tweets, up to as many as 10,000 characters, Re/code's "sources" report that brevity would still be a priority when users browse through their Twitter feeds. The company could accomplish this simply by showing a condensed version of longer tweets and requiring users to expand the tweet to read the full post.
Allowing long posts would mark a huge change from Twitter's current emphasis on 140 characters or fewer, making it difficult to anticipate whether such a change would be beneficial for the company. It's a huge risk. But considering the immense pressure on it to reverse its stagnating growth, the risk may be necessary.
Daniel Sparks has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.