Market Reacts Strongly to Twitter’s New Feature – Stock Was Up Seven Percent on Day

Twitter’s new feature

On March 14th Twitter stated that they were working on a “camera-first” feature. After delivering the news, Twitter’s stock spiked, rising over seven percent on the day. Although early in development, the new concept is said to resemble some of the Snapchats features while being integrated into Twitters existing platform. It is said to incorporate photo, video, and location. That being said, there is very little known about the new feature and nothing can be confirmed.

What does this new feature mean for Twitter? Why did the Market react so strongly?

To back up their successful earnings report, Twitter will need to report strong earnings in the upcoming quarter in order to increase or maintain their current stock price. To do this, Twitter will have to optimize their advertisement capabilities to maximize their ad revenue. Their new feature plays a huge role in increasing their ad revenue as it is an entirely new part of their platform which means entirely new advertising opportunities. Additionally, video advertising is significantly more expensive than text, therefore, many believe that this “camera-first” feature will have a huge effect on increasing ad revenue. Also, this new feature will allow Twitter to compete with other social media platforms such as Snapchat as they now too will be placing advertisements between photos and videos, similar to Snapchat stories.

What do we think of this new feature?

As it is the beginning steps of developing this feature, it is very difficult to understand the specifics of what it will look like and how people will react to it. We believe that a “camera first” feature in which the user can use their camera to post current/relevant photos or videos will fit seamlessly into Twitter’s current platform. Twitter specializes in current day to day topics in real time, this new feature will enhance the user’s experience by giving them the opportunity to express their ideas and feelings through real-time photo and videos that they take. That being said, there have been instances in which new social media features receive a lot of backlash from their platform users at first (ex. Snapchat update, Instagram stories). Even if Twitter’s new update doesn’t get a positive response at first, we believe that the platform’s users will eventually learn to get used to using it as they did with the other social media features mentioned above. Although in the early stages of development, we feel that a feature of this sort would be huge for Twitter.

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.

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.