Twitter Puts Its Own Spin on Snapchat Stories
Twitter reportedly is shifting the emphasis of its platform away from text and toward photos and videos, a framework that has been popular among advertisers on the Snapchat platform. (Emmanuel Dunand/AFP/Getty Images)
Twitter Inc (NYSE: TWTR) is reportedly taking a page out of the Snap Inc. (SNAP) playbook and developing its own version of Snapchat’s popular Stories feature, which combines location-based photos and videos focused on particular events.
Twitter investors sent the stock soaring by more than 7 percent on Wednesday on hopes Twitter’s in-app camera and Moments feature will help drive ad revenue growth.
According to CNBC, three senior advertising agency executives say Twitter is focusing on shifting the emphasis of its platform away from text and toward photos and videos, a framework that has been popular among advertisers on the Snapchat platform.
The executives, who have all either seen a demonstration of the new feature or are familiar with its development, say companies would be able to sponsor particular events and/or advertise between posted photos and tweets. Twitter has not commented on the new feature, and the executives say it appears to be early in the development stage.
Twitter generated the sixth-most advertising revenue of any company in 2017, according to eMarketer. However, its earnings and revenue growth has lagged competitor Facebook (FB), and its subscriber growth has consistently fallen short of Snap’s reported numbers. In the most recent quarter, Twitter reported its first profitable quarter in the company’s history, but analysts say the company still has a long way to go to demonstrate it can be a reliable long-term investment option.
“Twitter is still struggling to effectively monetize its nearly 320 million monthly active users, or MAUs,” Morningstar analyst Ali Mogharabi says. “Although Twitter remains popular, in our opinion, the firm’s monthly active user base does not stand out compared with other social media networks, such as Facebook (1.86 billion), Instagram (600 million) and the fast-growing Snapchat.”
GBH Insights head of technology research Daniel Ives says Twitter faces “clear execution/competitive challenges,” but the company may finally be headed in the right direction after years of disappointment.
“Recent 4Q results/guidance and positive checks thus far in 1Q is another step in the right direction for the company as it appears some organic growth initiatives, secular tailwinds, cost controls, and stabilization trends in MAU are slowly changing the narrative of the Twitter story,” Ives says.
GBH Insights has an “attractive” rating and $38 price target for Twitter. Morningstar has an “overvalued” rating and $24 fair value estimate for TWTR stock.
Wayne Duggan is a freelance investment strategy reporter with a focus on energy and emerging market stocks.
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