Twitter still has a significant number of challenges ahead.
Twitter investors got a nice Valentine’s Day present on Tuesday from the co-founder and CEO of the company. According to a securities filing that he tweeted a link to, Jack Dorsey acquired about 425,000 shares of Twitter—worth a total of about $7 million—through a variety of trusts he controls.
Those purchases helped push Twitter’s stock TWTR up by about 5% at one point on Tuesday, and some of that enthusiasm carried through into Wednesday as well. It may have been a nice counterpoint to some of the doom and gloom that pushed Twitter shares down last week, after the company reported its financial results. But does Dorsey’s investment mean anything?
Obviously, having the CEO buy $7 million worth of stock is a signal that he has faith in the shares, and possibly believes them to be undervalued, which is definitely a good thing. And his tweet about the trades was clearly designed to send investors a thumbs-up sign.
That said, however, Dorsey also recently made about $11 million, thanks to some pre-scheduled sales of Square SQ stock that he owns as the chief executive officer the payments company. So he had some money lying around with which to buy the Twitter shares without facing too much hardship.
Yet while Dorsey may have confidence that his investment will bring a great return, that doesn’t necessarily mean regular investors should load up as well.
As optimistic as Dorsey was in his opening statement on the company’s recent conference call, calling 2016 a “transformative year,” Twitter’s business appears to be fundamentally broken—and it’s unclear how the company intends to fix it. Several of the brokerage firms that cover the stock downgraded it to a “sell” after last week’s results.
Get Data Sheet, Fortune’s technology newsletter.
Although Twitter’s adjusted operating profit improved somewhat in the latest quarter, the company still managed to lose $167 million, according to generally accepted accounting principles, a result of the massive amounts of equity grants it has handed out to employees to get them to stay. Last year, Twitter lost a total of $450 million.
The service has also shown virtually no user growth in the U.S. over the past year, and only a tiny amount of growth worldwide. Revenues came in much lower than expected, and Twitter admitted that it is having to restructure its advertising model. Ad sales, which make up the vast majority of revenue, actually fell in the quarter.
Apart from a sudden sharp swing upwards to about the $24 level in October, when there were rampant rumors that a number of buyers were considering an acquisition of the company (none of which materialized), Twitter’s stock has tumbled by more than 70% over the past two years.
So, could the company’s share price have hit bottom? Possibly. Some analysts have argued that based on Twitter’s cash flow, it is fairly valued at around $10 billion. But buying the shares assumes that they will increase in price. Is there any reason to believe that the stock is going to climb significantly over the next few months?
It seems unlikely that any of the acquirers who lost interest in bidding for the company in October has seen anything that would change their minds about doing a deal now. If anything, in fact, Twitter’s latest earnings report makes it look significantly worse.
There’s still the possibility that Twitter might catch the eye of a foreign acquirer, someone like Softbank. Alternatively, a private-equity group buyout led by someone like Marc Andreessen—who used to be an avid Twitter user—is also a possibility. But those seem like long shots at best. As always, the question is: How much risk are you willing to take?