Where Will Twitter’s Stock Go From Here?

Twitter Stock Review(TWTR):

For years, Twitter has failed quarter after quarter to deliver profitability.  Recently, Twitter had its best quarter ever with a net income of 91 million dollars. Shocking the market, Twitter’s stock price has gone straight up since its successful earnings.  Additionally,  although Twitter’s revenue rose, its monthly active user base showed no growth. Twitter has shown great promise with its successful last quarter, however, there are still many issues surrounding the company. Let’s take a closer look at Twitter and what the future could hold.

Their Challenges:

At the moment, one of Twitter’s Problem is the number of fake or inactive accounts on its platform.  Many analysts downgrade the stock believing that many fake and or inactive users make up a large part of their user base. Also, many analysts believe Twitter is too similar to its behemoth competitor, Facebook. They believe that Twitter doesn’t have enough key differentiating factors and will eventually be crushed by Facebook.

The President’s Affect on Twitter:

If you follow politics, you know that The President Trump’s favorite way to reach the general public is through Twitter. He attracts many to the platform who otherwise would not of been on it. As a result, the President has brought publicity and new users to the platform.

Our View:

Although many see Twitter’s Short-term success as no indication of the future, we disagree.  

Twitter is already working on eliminating the inactive accounts that scared away many investors. Once these accounts have been eliminated, we don’t believe that this problem will have a significant or lasting effect on the platform. Additionally, we don’t believe the justification of this downgrade is fair because most other major social media platforms deal with or have dealt with similar issues.

From our recent experiences on Twitter, we have noticed an increase in ads throughout the platform. The company is clearly working to increase its ad revenue by finding new ways to increase the number of ads on the platform. This is great news as it shows advertisers are finding their advertisement campaigns on Twitter successful. However, if Twitter were to make ads even more frequent, the platform would begin to look spammy and tacky. Therefore, for Twitter to start making even more money(which it needs to – currently valued at 101 p/e) it will need to increase its daily and monthly active user base.

We see Twitter as an essential platform that will be here for the long run. Its platform separates it from other social media platforms such as Facebook and Instagram because it is THE PLACE for live news regarding any subject. If we want to see live updates of a sports game – we go to Twitter; If we want live news about a political topic – we go to Twitter; If we want weather updates – we go to our local weather man’s Twitter. The list goes on and on. We would never go to Facebook or Instagram to find these results, because people posting on Facebook and Instagram are mostly sharing special moments in their life, and not their opinion on a public news matter. That being said, some Facebook users do post about these topics, but generally speaking, Twitter has locked up that category. Therefore, because Twitter has a niche that is essential to social media and a strong demand for ads on their platform, we believe they have the potential to continue their success far into the future. 

Disclaimer: Do not invest your own money without doing your own research, our content is not meant to convince you to buy or sell a stock, but simply to share ideas and unique viewpoints.

 

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Could the Most Hated Snapchat Update Actually Boost the Companies Sales?

Although the snapchat update has received a lot of hate, could it still be helping their sales?

Recently, Snapchat is under fire as the response to their update has been anything but positive. With all the negative user reviews, one might  think that Snap would consider retracing its steps and return to its old platform. However, the company has shown no signs of this retraction as Ceo and Founder Evan Spiegel said, “We’re excited about what we’re seeing so far,” and continues stating “The best part is that even some of the complaints we’re seeing reinforce the philosophy [behind the design].” As you can clearly see, he completely disregarded the hate the update has been receiving and the 1.2 million people that have signed the petition to change Snapchat back to its prior form.

It leaves people asking the question, “Why does Snap keep the new update if no one likes it?”

The answer to this question: revenue.

Although Snapchat currently has 187 million daily users, it is and has been losing money for years.

Snapchat’s stock has finally started to rally as it posted record breaking fourth quarter earnings on February 6, 2018, of 285,693 million dollars, however, the company still lost 28 cents per share or 159 million dollars. Despite the hate regarding the new update, the update itself looks like it could continue the uptrend in Snap’s sales.

A lot of people have been outraged with the way Snapchat’s signature story feature is now positioned on the left side of the app which makes it much harder to rewatch stories. Personally, we don’t like it either, but will it make us and our friends stop using the app? No! The reason being is our streaks are way too valuable to throw away because of an update.

The new update now leads the consumer to the right side of the app, where the stories used to be. This whole side of the app is now dedicated to the discover section. This is where Snapchat makes most of their revenue, as there is a lot of sponsored content from companies, and many ads in between the content. Additionally, a slight but important new feature to the app is that when a particular story or headline is over, it doesn’t take you back to to the displayed section of news, instead, it goes right to the next popular story, headline, celebrity sighting, or sporting event, keeping the user engaged, and more importantly presenting them with more ads.

How will Snapchat’s revenue be affected by the new update?

We believe the new Snapchat update was designed as a way to increase ad revenue. While increasing ad revenue, this new update has received an echoing negative response from many Snapchat users. Will this lead to a significant drop in Snapchat’s huge daily user base? If so, will the new revenue model in the update make up for the lost users?

Let us know your thoughts on this bold move from Snap.

Disclaimer: Do not invest your own money without doing your own research, our content is not meant to convince you to buy or sell a stock, but simply to share ideas and unique viewpoints.