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- Citigroup analysts assigned a $35 billion valuation to Instagram that is only now monetizing the user base.
- Instagram and Twitter have comparable logged-in user bases, though the former is growing faster.
- Twitter is significantly ahead of Instagram on the monetization path, and provides an attractive valuation compared to Instagram that is part of the significantly larger Facebook.
Update: Dick Costolo Has Worn Out His Welcome At Twitter
- Our last Twitter piece stated that we'd like to see Dick Costolo put up or shut up.
- Christmas week rumors are hinting at Costolo hitting the road in 2015.
- Twitter needs to do what the street wants and punt Costolo.
- While Twitter posted excellent financial results during 2014, we think "huge expectations" caused its stock price to decline by over 40% during the year.
- Factors such as a slowdown in sequential growth of monthly active users (MAUs) and a decrease in engagement levels pulled down market sentiment.
- We advise investors to view Twitter's business more independently from its rival Facebook.
Twitter Shares Jump Over Speculation Of CEO Stepping Down
- The market continues to misunderstand the audience reach of Twitter in comparison to Facebook and LinkedIn.
- Contrary to the news of the week, Instagram is not larger than Twitter.
- Investors should view the recent slump in the stock as a buying opportunity.
- Decelerating user growth is troubling given the somewhat low global penetration of Twitter’s social media platform.
- The company has been incurring huge and increasing operating losses over the past several years, which is unlikely to change any time soon.
- As the company burns through its cash, it will be forced to raise more by selling stock (causing further dilution) and/or taking on more debt.
- Twitter’s debt received a “junk” rating from credit agency S&P; its common shares should also be rated as speculative junk.
- Twitter shares are grossly overvalued at present levels and have 35%+ downside potential over the next 12 to 18 months.
- Twitter has fallen about 20% in the last three months.
- Criticism of Dick Costolo is rampant, and his family trust just unloaded half their shares.
- Despite the speculative valuation, we have a small long position, and we're giving the company another quarter before we re-evaluate our position.
- Ongoing insider sales at Twitter primarily a result of options-weighted executive compensation.
- November insider sales from seven insiders represent nearly 1% of TWTR’s market cap and the biggest month of insider sales since August.
- In particular, CEO Dick Costolo has divested over 50% of the shares sold this month.
- The financial world learned of Twitter’s interest in acquiring an undisclosed company after CFO Anthony Noto accidentally sent out a tweet intended to be private for a Twitter colleague.
- Sources have reported that the company is selfie-app Shots, an app heavily promoted and funded by celebrity Justin Bieber.
- If acquired, the Shots app may provide Twitter another avenue to boost user growth, but it depends on how the company uses the Shots resource.
- Other companies, like Facebook and Yahoo, may also be able to integrate Shots into their business plans.
Twitter Expands Direct Messaging To Include Public Tweets
- Twitter has plenty of growth levers to pull that will drive revenue significantly higher.
- The logged-out audience total pushes the total consumers of Twitter data towards 800 million monthly visitors.
- Twitter has a lower forward PS ratio than other Internet giants, suggesting a better value proposition than most think.
How Twitter Became, By Definition, A Fan Favorite Stock
- Twitter will continue to differentiate itself away from Facebook.
- The stickiness of Twitter is mostly driven by how it's an alternative platform to Facebook that's more brand and celebrity friendly.
- Given the growing amount of content from famous public figures, and the sheer penetration into this demographic, Twitter's longevity is more or less guaranteed.
- Twitter also offers significant advertising potential, as it is a relevant tool for users when buying products and services.
- Advertisers can pursue a multitude of strategies on Twitter to drive advertising efforts like celebrity endorsements, brand-centric pages, and customer interaction to drive earnings growth.
- Aggressive traders may fancy Twitter stock as an obvious short candidate. Twitter, as a publicly traded corporation, has yet to turn a profit.
- The low interest rate environment has fueled the second coming of "irrational exuberance" in Web 2.0 stocks.
- Twitter short sellers would be exposed to a short squeeze and staggering losses if the social media company were to actually turn a profit over the next year.
- TWTR's investor day was uninspiring with bullish guidance and optimistic outlook.
- 60k ad customers makes me question the value of TWTR to a typical SME customer.
- Focus on core upgrade is positive, but better execution is needed.
Twitter Has A Compelling Ten-Year Growth Trajectory
- Twitter will drive revenue growth through ad load increases, higher levels of ad engagement, growth in active users and additional business opportunities.
- The company offers a scenario where revenue reaches $14 billion in 2024.
- After factoring long-run cost assumptions, net income will exceed $2.2 billion in 2024.
- Over the next ten-years the stock will grow into its admittedly high valuation.
- I estimate that by 2024, Twitter's market cap (conservatively speaking) will exceed $56 billion.
- Standard & Poor's rates Twitter debt as speculative.
- The stock remains a Strong Buy.
- While a speculative rating on the debt wasn't anticipated in the original thesis, the long-term potential of the stock is not altered by this move.
- S&P issued a double-B minus credit rating for Twitter.
- Double-B minus is three notches into non-investment grade territory.
- If Twitter's credit rating is three notches into junk territory, what does that say about the stock?
Twitter Remains The Most Misunderstood Company In Tech
- Twitter is not a social media company; it is a mobile advertising company.
- Twitter has invested heavily to deliver tools that let developers understand and monetize apps.
- Twitter has huge ambitions for growth it is on track to meet.
Tue, Nov. 25, 5:53 PM
- CNBC reports Twitter (NYSE:TWTR) has held talks with Shots, a Justin Bieber-backed developer of iOS/Android apps for taking and sharing selfies.
- Shots reportedly has 3M+ users, nearly 2/3 of whom are women under 24. Twitter, meanwhile, has built a huge base for its Vine 6-second video service.
- The report comes a day after CFO Anthony Noto accidentally tweeted out an apparent direct message about M&A talks. Noto: "I still think we should buy them. He is on your schedule for Dec 15 or 16 -- we will need to sell him. i have a plan."
- Re/code also reports Twitter has talked with Shots.
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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