Quantifying World Cup Impact - What Twitter Could Learn From Comcast
- Going into Q2 earnings, I expected Twitter to show the World Cup impact in a similar manner that Comcast showed the impact of the Olympics on its Q1 2014 results.
- Twitter implied the World Cup impact was de minimis.
- The market's valuation of Twitter implies the World Cup impact in Q2 is recurring.
- I do not think Twitter can replicate Q2's out-performance on operating metrics or advertising rates in Q3. I rate the company a sell.
My Growth Portfolio: Twitter's Quarter Indicates Platform Strength
- Twitter monthly active users exhibited surprisingly strong growth.
- I continue to remain positive on Twitter and maintain the stock in my growth portfolio.
Twitter Earnings Aftermath: Cause For Celebration?
- Twitter's stock saw better movement after the most recent earnings call than the one prior.
- Ad revenue continues to grow as a result of higher engagement and MAUs.
- Mobile ad spending continues to grow, and Twitter stands to capitalize.
- Twitter has launched a beta test for promoted video.
- Videos are easier to monetize, and have much higher CPM.
- This bodes well for Twitter shareholders as more efficient monetization will boost top-line revenue growth.
Why Twitter's 38 Million Zombies Could Impact Ad Revenue
- The Wall Street Journal is reporting that 14% (38 million) of Twitter's Q2 2014 MAUs do not log into the service and never see an ad.
- Twitter's active user growth and advertising reach are less than once thought.
- I expect ad placements, advertising rates and ad revenue to decline. Twitter is a sell.
- The small and medium sized businesses in the U.S. are expected to increase their spending on digital advertising from $5.4 billion in 2010 to $16.6 billion in 2015.
- Recently, Twitter changed its Ad fee structure to target the small and medium sized businesses. Twitter can target Facebook's disappointed customers who are competing for limited space.
- However, user growth and user engagement remain a key challenge for Twitter.
Twitter Revamps Ad-Revenue Model Similar To Facebook
- Reports have surfaced about Twitter altering its advertising structure to be more similar to Facebook's.
- This alteration in advertising structure gives me more conviction of my bear thesis on Twitter.
- In my previous article, I discussed how Twitter's business model was failing and in need of repair.
- Twitter experienced an ephemeral benefit in engagement from the World Cup.
- The share of users who see ads and thus generate revenue for Twitter is quickly shrinking.
- Management is blurring the figures about its true user growth.
Facebook And Twitter Accept A Gift From Sprint
- Sprint's new plan is great for investors in Facebook and Twitter.
- The new plan may create subtle but very profitable changes in how people use their phones.
- People that don’t sign up for the plan will still get to view more Facebook advertisements.
- Market considered Twitter's earnings a beat and shares surged this week.
- Twitter lost $144.5 million in Q2 2014 compared to a loss of $ 42.2 million in Q2 2013.
- Stock based compensation was $158.4 million in Q2 2014 or 50.7% of total revenue.
- Twitter may have beat non-GAAP expectations, but I will not to reconsider my negative outlook.
Twitter's Earnings Were Strong But The Market Price Is Still Steep
- Twitter reported an uptick in its monthly active user additions and strong advertising revenue growth.
- Even though EBITDA margins are still thin, there was a significant year-over-year improvement.
- However, we continue to believe that Twitter's stock is overpriced.
- Twitter's explosive earnings was sparked by the firm's growth in MAUs and Timeline Views.
- A significant reason for Twitter's increase in engagement was this year's World Cup.
- Twitter's earnings win is not a game changer, but it increases the overall potential of Twitter significantly.
Goldman, Merrill, Et Al, Upgrade Twitter To 27x Revenue After Earnings Crush
- Twitter reported blow out Q2 results, sending the stock up 29% to $50 in after-hours trading.
- Analyst upgrades equate to a median of $58 per share and 27x run-rate revenue.
- A repeat performance in Q3 justifies the valuation, but I would rather sell now and revisit next quarter.
- Twitter earned 2 cents per share which beat analysts' estimates for a 1 cent loss.
- The news does not change my opinion that Twitter is a buy.
- My call was exactly right as I said to buy it at $35 and the stock is up 28% after hours.
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Thu, Jul. 17, 5:55 PM
- CardSpring offers a platform that allows retailers and publishers to offer online promotions (linked to credit/debit cards) for offline goods and services. The company has also launched an analytics service that tracks the impact of its promotions on offline sales. Partners include Foursquare and VeriFone.
- Twitter (NYSE:TWTR): "We’ve already given users the ability to get deals and discounts, surprise someone with a coffee, or even add items to their online shopping cart ... we’re confident the CardSpring team and the technology they’ve built are a great fit with our philosophy regarding the best ways to bring in-the-moment commerce experiences to our users."
- Deal terms are confidential. The purchase adds to an e-commerce push that has seen Twitter partner with Amazon and reportedly explore a payments partnership with PayPal rival Stripe.
Mon, Jun. 30, 4:04 PM
- Re/code reports Twitter (TWTR - unchanged) is "in the process" of buying TapCommerce, the owner of a leading mobile ad retargeting platform (delivers ads based on user activity on other sites/apps). Sources state the price is around $100M.
- TapCommerce claims its platform delivers ads on 50K+ iOS/Android apps, and handles 15B+ (automated) ad impression bids each day. It gets paid on a per-click basis.
- Twitter already delivers retargeted ads on its site and apps, and was reported last year to be hatching plans to offer them via its MoPub mobile ad exchange. Acquiring TapCommerce would eliminate the need for MoPub to offer an in-house solution.
- Earlier this month, Twitter announced it has bought Namo Media, provider of a native ad platform for mobile apps. The purchase price was reportedly ~$50M.
- Update: Twitter confirms the deal. No purchase price is given. "Together with the TapCommerce team, Twitter will be able to offer mobile app marketers more robust capabilities for app re-engagement, tools and managed service solutions for real-time programmatic buying, and better measurement capabilities."
Thu, Jun. 19, 10:42 AM
- SnappyTV provides tools that allow brands and media companies to clip and edit live video content for distribution on Twitter, Facebook, and YouTube. Clients include ABC, Fox, SAP, TechCrunch, the NCAA, and NASCAR.
- Twitter (TWTR -0.3%) notes SnappyTV is already used to distribute both organic Twitter posts (with embedded clips) and Amplify video ads. The company says it'll "continue to invest in SnappyTV’s product and integrate it more tightly with Twitter," while continuing to support non-Twitter distribution.
- In March, Twitter bought SecondSync and Mesagraph, two European providers of social media analytics tools for TV broadcasters/advertisers. The company is hungry to leverage its second-screen status for millions of users to grab a bigger chunk of TV ad budgets.
Thu, Jun. 5, 1:55 PM
- Twitter (TWTR +4%) has bought Namo Media, developer of a native ad platform for mobile apps. TechCrunch reports the purchase price is around $50M.
- Namo's offerings will be integrated with Twitter's MoPub mobile ad exchange/network, which (per Twitter) reaches ~1B Android/iOS users. The purchase comes after ad giant Omnicom struck a $230M deal with Twitter that involves making ad buys via MoPub.
- Interest in native ad formats - Twitter's Promoted Tweets/Trends serve as examples - has been especially strong for mobile, given the low click rates and even lower ad prices attached to standard mobile display ads. Namo bolsters MoPub's product line as it battles with Facebook, Google, Apple, and others in a very competitive in-app ad market.
- Shares have rallied above $34 with an assist from Pac Crest's Evan Wilson, who has launched coverage with an Outperform and $45 PT. Wilson is upbeat about Twitter's recently-launched app install ads, which are delivered both via Twitter's site/apps and MoPub.
- The launch follows five May upgrades that came in the wake of Twitter's lockup expiration.
Wed, Jun. 4, 6:35 PM
- In addition to holding buyout talks with SoundCloud (before abandoning them), Twitter (TWTR) has mulled acquiring Pandora (currently worth $5B) or Spotify (recently valued at $4B+), the FT reports.
- The paper adds Twitter never held talks with Pandora or Spotify - bidding for either company would likely involve Twitter making aggressive use of its richly-valued equity, much as Facebook has done to acquire WhatsApp and Oculus.
- Re/code reported last month Twitter is thinking of buying SoundCloud. But the WSJ soon followed by stating Twitter backed out after concluding "the numbers didn't add up." The FT reports something similar.
- COO Ali Rowghani is said to be leading Twitter's music push, as the company looks for way to both strengthen slowing user growth/engagement and burnish its credentials as a media hub.
- The company recently partnered with Billboard to launch real-time charts that track the popularity of songs shared on Twitter.
Mon, May. 19, 2:13 PM
- Re/code reports Twitter (TWTR -0.1%) is thinking of buying top music/audio-sharing platform SoundCloud.
- Berlin-based SoundCloud likes to call itself "YouTube for audio," and claimed to have 250M listeners as of last October (a base roughly on par with Twitter's). A large chunk of those users rely on SoundCloud's mobile apps.
- A recent $60M funding round valued the startup at $700M. Its services are monetized both via ads and subscription services.
- An acquisition would come with copyright baggage attached: Twitter once planned to integrate SoundCloud with its (now-abandoned) music service, but backtracked after music labels protested about SoundCloud's lack of licensing deals.
- Joining Twitter would give SoundCloud the resources to strike licensing deals, as well as to ramp its audio ad sales. It would also bolster Twitter's attempts to act as a media-sharing/distribution hub (results have been mixed thus far).
- If Twitter is looking to pay with equity, a deal might've been a lot cheaper in January.
Tue, Apr. 15, 11:05 AM
- Gnip provides businesses with real-time and historical datasets (as well as value-added data "enrichments") for nine social sharing platforms, including Twitter (TWTR +0.5%), Foursquare, Tumblr, and WordPress. The company also offers managed API access for Facebook, Instagram, Google+, and several other platforms.
- Twitter: "Gnip has played a crucial role in collecting and digesting our public data and delivering the most essential Tweets to partners ... Together we plan to offer more sophisticated data sets and better data enrichments."
- Gnip complements a data licensing business that accounted for 9% of Twitter's Q4 revenue, and which has been trying to grow via industry-specific partnerships.
- The startup could also help Twitter provide higher-quality data to advertisers (already a priority) as it continues fleshing out its ad product lineup. Gnip's clients include ad tech and social media monitoring firms.
- Deal terms are undisclosed. The acquisition might not go over well with Gnip rivals/fellow Twitter partners such as DataSift. Apple bought Twitter search engine/data provider Topsy last year.
Mon, Apr. 7, 6:11 PM
- Twitter (TWTR) has bought Cover, developer of an Android lock screen app that gives users quick access to their most frequently-used apps.
- Cover displays apps on user lock screens based on how frequently they're accessed, and at what time. It also throws in app-switching and settings customization tools.
- A 2013 TechCrunch review: "[Cover] leverages all the super powers of Android — replacing the lockscreen, knowing when you use your other apps, monitoring your sensors to determine what apps to bring up, and even modifying your ringer settings on the fly ... Cover’s 'Peek' feature is the fastest way to open apps I’ve ever seen."
- Look for Twitter to directly integrate Timeline access in future versions of Cover, with the goal of appealing to users who want instant access to 140-character-and-shorter bursts of news and commentary. The company's U.S. mobile usage/engagement rates currently trail Facebook's, even after adjusting for a smaller MAU base.
Mon, Mar. 31, 1:58 PM
- Twitter (TWTR -1.5%) has bought SecondSync, a U.K.-based startup that provides analytics for TV-related social media activity to broadcasters and advertisers.
- SecondSync: "Twitter is the only place that hosts a real-time, public conversation about TV at scale. By joining Twitter, we will be able to help take that experience ... to the next level — particularly in markets outside the United States." The startup has a partnership with Facebook that might get unraveled by its new owner.
- Twitter has moved aggressively to offer TV-linked ad products that can be used in multi-screen campaigns. The company has also reportedly been pressuring companies that collect/analyze social media data about TV content not to work with rivals (read: Facebook).
- Separately, Twitter has hired Google exec Philippe Dauman Jr., the son of Viacom's CEO, to be its director of commerce partnerships. The hiring comes two months after Twitter was reported to be near a deal with PayPal rival Stripe to enable credit-card payments through its platform. Chinese peer Weibo has supported payments for some time.
- Previous: Twitter makes a flurry of product moves amid growth worries
- Update: Twitter has also bought Mesagraph, a provider of social media analytics to French broadcasters and advertisers, and expanded a TV measurement partnership with analytics firm Kantar to cover several additional international markets.
Mon, Jan. 13, 11:40 AM
- Facebook (FB -0.9%) has acquired Branch Media, a startup that provides an app (Potluck) that pushes news snippets to users with the goal of enabling conversations with friends, as well as a link-sharing site (Branch) meant to host private discussions on news topics. Sources tell The Verge the price tag is around $15M.
- Though Branch's products will (for now) remain in place, its team will now focus on developing products for Facebook (via a new Conversations group) that "[help] people connect with others around their interests." CEO Josh Miller says Facebook wants his company to "build Branch at Facebook scale."
- Facebook has its eyes set on becoming a primary source for sharing and discussing news stories; the company recently tweaked its news feed algorithm to show more "high-quality" stories, and Mark Zuckerberg has said he wants Facebook to be "the best personalized newspaper in the world."
- But (as noted in a December AllThingsD report) a disconnect currently exists between Facebook's goal and actual user activity. "Low-quality" viral content posted on Facebook often receives far more clicks and comments than "high-quality" news content.
- Twitter (TWTR) has arguably seen more success (albeit with a much smaller base) at developing into a news sharing/discussion hub.
Dec. 4, 2013, 12:20 PM
- As analysts and pundits mull Apple's (AAPL -0.6%) surprising purchase of Twitter analytics startup Topsy, plenty of attention has been given to Topsy's advanced search tools, which many consider to be better than Twitter's (TWTR +5%) on-site search capabilities.
- Azeem Azhar, the founder of fellow social analytics firm PeerIndex, thinks Topsy could end up acting as "the search layer for iOS," indexing both social media content and "the best bits of the Web that power Siri and Apple Maps." He points out doing so would reduce (but not eliminate) Apple's dependence on Google.
- TechCrunch, meanwhile, thinks Topsy's search tech and ability to gauge consumer sentiment could improve the quality of the App Store and iTunes' search and recommendation engines. And Gene Munster sees Topsy potentially improving Siri and Maps by integrating data related to current events and trending topics.
- Separately, AllThingsD reports Twitter, which is rallying today along with other Internet momentum names, considered buying Topsy on multiple occasions, out of interest in its search tools. But the microblogging giant ultimately held off, something sources think stems from Twitter's belief it could build some of Topsy's tools on its own.
Oct. 25, 2013, 5:41 PM
- The WSJ's Everlyn Rusli reports Mark Zuckerberg (FB) approached Snapchat about acquiring the startup for $1B+, but was turned down.
- Much like the Instagram deal, buying Snapchat would give Facebook control of a mobile picture-sharing platform that's seeing massive growth (350M+ Snapchat photos are now shared daily), and which is evolving into a social networking platform that could affect Facebook's engagement levels. Snapchat would also strengthen Facebook's efforts to keep teen users engaged amid concerns its popularity with the demographic is slipping.
- Piper's latest survey of U.S. teen social media use found only 23% named Facebook their most important social media site, down from 33% in spring and 42% a year ago. On the other hand, Instagram rose to 23% from 17% and 12%. Twitter (TWTR) came in at 26% vs. prior levels of 30% and 27%.
- Update: AllThingsD reports Snapchat is close to raising funding at a valuation that could reach $3.6B.
TWTR vs. ETF Alternatives
Twitter Inc is a global platform for public self-expression and conversation in real time. It provides a way for people to stay informed about their interests, discover what is happening in their world and interact directly.
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