A few months ago, we eased our bearish stance on Twitter (NYSE:TWTR) following an NFL deal which we felt was a step in the right direction for the struggling social media platform. Since then, the company has expanded its live streaming footprint. Although we remain largely cautious on the company long-term against growing competition, we agree directionally with how the company is attempting to distinguish itself. We think the upside from streaming is still speculative, but acknowledge successful early results could pave the way for a brighter future for this stock.
While TWTR has expanded its streaming footprint to include all sorts of content, the company is primarily focused on acquiring sports content. We like this direct focus, and agree directionally with the plan of mastering sports content before branching into other forms of content. Moreover, considering recent ESPN sub churn, we believe there exists a growing market for live sports delivered directly to the consumer. Most of these cord-cutters are millennials, and TWTR is particularly popular among that crowd.
TWTR is also a marketplace for discussing sports, likely fueled by professional athlete engagement on the platform. Upwards of 70% of NBA players have a TWTR account, and this is largely a result of TWTR's inherent chat-oriented structure which is naturally conducive to quick-fire opinion posting. It's a natural sounding board for all users, amateur fans and professional athletes alike. When Kevin Durant announced he was going to the Golden State Warriors, the NBA superstar tweeted about it. In the minutes and hours following Durant's tweets, fans and fellow professional athletes alike took to TWTR to post their responses.
From multiple aspects, TWTR is particularly leveraged to deliver sports content direct to the consumer. Its target demographic has heavy overlap with the 25 million or so cord-cutters in the US, and is also a natural marketplace for sports discussion. Facebook (NASDAQ:FB) is likewise leveraged to deliver streaming sports content, but for whatever reason, has not been making the same moves TWTR has been making in this space. FB has made some minor moves here, such as its Olympic Basketball deal, but it overwhelmingly feels like FB has turned its attention elsewhere. FB even reportedly backed out of an NFL streaming deal (which TWTR subsequently won) because the company wanted more flexibility than the league was willing to give.
Nonetheless, FB's relative dormancy in acquiring streaming sports content has given TWTR an opportunity to carve a niche for itself as a hub for streaming content. The upside right now is largely speculative (it really all depends on how much consumers gravitate towards watching sports online), but the line-up of new sports content TWTR will feature this upcoming sports season is exciting. The line-up includes:
- 1 MLB game per week that is not otherwise nationally televised
- 1 NHL game per week that is not otherwise nationally televised
- 2 new weekly NBA shows exclusive to TWTR
- 10 Thursday Night NFL games
- 150+ games from Pac-12, though no football or basketball yet
- A nightly sports show called "The Rally"
TWTR has not really proven this side of its business yet. Wimbledon was a sneak preview, but an "incomplete test experience" according to management. We are cautiously optimistic about the platform's ability to re-invigorate user growth behind all of this new streaming content.
Disclosure: I am/we are long FB.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.