Tesla Motors Inc (NASDAQ:TSLA) has been one of this year’s rising stars, although many think the company could be in trouble for various reasons. Meanwhile Twitter Inc (NYSE:TWTR) just debuted on the markets. Tesla shares have rocketed upward close to $200 but since fallen down nearly as fast to around $130. Twitter shares climbed on opening day but since have hovered right around their opening price.
The two companies couldn’t be more different, but Forbes contributor Jonathan Salem Baskin suggests that both of them are having difficulties managing investor expectations. He also believes the two companies should learn from each other about what to do to manage those expectations.
Tesla and Twitter both have problems
He admits that both companies have their issues, but investors have very different views of them. The problems faced by each of these companies are quite different. Perhaps unsurprisingly, investors are holding Tesla Motors Inc (NASDAQ:TSLA) to higher standards than Twitter in terms of expectations. On some level, this makes sense because the company has been public for much longer than Twitter Inc (NYSE:TWTR).
Twitter needs a niche
Twitter’s problems stem from its newness to the market. The company isn’t profitable yet, but then Tesla hasn’t been profitable for that long either. Look how long Tesla took to become profitable. Twitter has to figure out how to make money in a way that’s unique. It has to find its own niche within the social media world. We already know that social media advertising works.
Facebook Inc (NASDAQ:FB) is the generalized social media company where people connect with friends, while LinkedIn Corp (NYSE:LNKD) is the place for business connections. So what about Twitter? The author suggests it needs to create something new and innovative like Tesla Motors Inc (NASDAQ:TSLA) did. However, I would point out that Twitter has some tools already in place which differentiate it from other social networks. The company simply needs to appropriately direct and monetize these tools, which may be easier said than done if Facebook is any indication.
The author also suggests that Twitter Inc (NYSE:TWTR) is almost just too nice, which doesn’t fly for long on Wall Street.
Tesla Motors Inc (NASDAQ:TSLA), on the other hand, is constantly on the defensive, whether it’s against conventional automakers, auto dealerships or the traditional media. Baskin, like others, says the automaker needs a vehicle for the masses.
What can Tesla and Twitter learn from each other?
At this point the path Tesla needs to follow has become clear, but it may be too early for Twitter’s path to be clear yet. Tesla knows it needs a mass market vehicle, and the launch of such a vehicle will certainly reset expectations and place it more firmly into the same camp as traditional automakers which have been around for a century. However, Baskin believes the company might have to stop fighting with people so much. Unfortunately the boxing ring is exactly where Tesla is right now as it challenges the way people think about cars.
Twitter will have to figure out its path yet. Being nice all the time probably won’t work either, but it may work for now while the company figures out where to go next.