• by Sean Hargrave , Staff Writer, May 7, 2014

The beating that Twitter shares took yesterday was always in the proverbial post. If you promise great things and then lock early investors in for the best part of six months and fail to deliver, it should come as little surprise when your share price dips. That they fell by nearly a fifth in a single day might have come as a shock or at least a wakeup call. They're now trading below their first-day closing value and at around half of their peak price, which they reached over Christmas.

The company can claim all they like about having a great quarter for subscribers -- losses that are increasing overall are what is alarming investors, and they showed their displeasure yesterday. Some very keen eyes will be on share volumes traded today, which will either show a recovery or further slump. While the depreciation is obviously alarming for investors and Twitter, a cautionary voice would point out that at the moment, they're trading at a comparable price to their launch day,  and so what has been wiped off their value is largely the hype that followed a successful IPO. If they dip further, however, that cautionary voice will probably exhibit a greater degree of shared panic.

Some of the sell-off has been put down to staff wanting to see some money after sitting on their shares for nearly six months. I don't buy this. It might be partially true, but the big picture is that two sets of disappointing quarterly results since the IPO have given investors the jitters.

Twitter's founders and chief executive have promised not to sell their shares and so too have two bank share holders -- so that at least is a statement of intent, but it can only seek to reassure for the short term.

So Chief Executive Dick Costolo has an uphill task on his hands over the next three months. 

The saviour, if there is to be one, is likely to be integrating Twitter with its MoPub mobile advertising network, but it's likely that Twitter users will have to accept that the free lunch is over. The microblogging site might have to consider going a little more down the Facebook route with new advertising positions and a greater emphasis on promoted tweets turning up in the equivalent of a user's news feed.

After keeping feeds relatively free of promotional content, it would not be a huge surprise if Twitter came to the conclusion that to take on Facebook it might have to get a little more mercenary. 

Mark these words -- one more bad set of quarterlies and there will be desperate measures taken at Twitter to shore up revenues. What today looks like a relatively uncluttered, ad-free feed will take on a more promotional feel.

The next three months, for what is now a listed company, will be crucial for the future direction of Twitter.