This Could Be the Next Big Thing for Twitter, Inc.
Twitter, Inc. (NYSE:TWTR) seems to have hit a rough patch this year. Despite the company’s better-than-expected performance in the last two quarters, short interest in Twitter stock has spiked. Sadly, TWTR stock is now the worst performing stock in the Internet technology space, down more than 27% year-to-date and more than 50% since its summer highs.
Indeed, the threats of slowing monthly active user (MAU) growth and weak monetization are real, but there are still ways the company can pull itself together and come back strong. Here’s one way Twitter CEO Jack Dorsey can save the company.
Forget E-Commerce; This Is the Age of M-Commerce
We’re all familiar with e-commerce, which is aggressively taking on the traditional brick-and-mortar commerce space, with companies like Amazon.com, Inc. dominating the space. However, there’s another phenomenon fast catching up that might eventually overtake e-commerce: it’s mobile commerce, or m-commerce.
M-commerce is the buying and selling activity that takes place solely through handheld devices, that is mobile phones, tablets, phablets, and the like. This holiday season alone, 34% of the total online sales were realized from the mobile platform in the U.S. (Source: “Thanksgiving/Black Friday Online Sales Hit $4.5B, 34% Of Purchases Made On Mobile,” TechCrunch, November 28, 2015.)
Two social media companies that have recently become active in this space are Facebook, Inc. (NASDAQ:FB) and Pinterest. This is one avenue where Twitter hasn’t tried its luck, but it may still stand a chance to win big.
Earlier this year, Facebook rolled out a buy button on its platform, allowing its users to directly purchase merchandise within Facebook, without having to leave the platform and without sharing payment information with sellers. The feature delivers both security and ease to its users. Likewise, Pinterest has also introduced “Buyable Pins” this year, which work along the same lines as Facebook’s buy button.
Now, I’ve floated the idea before why acquiring Pinterest could make sense for Twitter. Pinterest has a fast-growing subscriber base and already boasts a well-monetized platform, with features like “Promoted Pins” and in-app buying options. Nonetheless, whether Twitter considers this option or not, the microblogging social web site can still integrate the same feature on its platform.
Bear in mind that rival Facebook has been replicating Twitter’s business model in an effort to drive it out of business. Facebook’s latest “Search FYI” feature is a tailored search source that brings up news from around the world on topics that its users find interesting. Facebook has also recently introduced “Instant Articles,” allowing users to instantly read news from third-party web sites within the Facebook app. Additionally, Facebook has launched a new app, “Notify,” which sends push notifications on the latest news and sales promotions based on a user’s preferences to their locked phone screen. It is high time Twitter starts responding to Facebook’s threatening moves.
Facebook has been cleverly utilizing users’ provided data to its advantage. Based on your online social activity, including your likes, shares, and searches, Facebook is able to dish out tailored ads to each user. The concept is referred to as “contextual m-commerce.”
Contextual m-commerce is apparently the future of online commerce and the evolution has already begun. With contextual m-commerce, a mobile retailer will be able to deliver buying and selling ideas to users based on both their implicit and explicit preferences. Twitter needs to do the same. The move will generate interest for sellers, bringing in more advertisers and thus, more ad dollars.
The Bottom Line on TWTR Stock
The present online industry is dominated by FANGs (Facebook, Amazon, Netflix, and Google), all four of which are top growth performers this year. Twitter may have troubles replacing the “F” with a “T,” but it’s not impossible.
Dorsey has taken some effective steps in the latest quarter, including “Promoted Moments” and auto-play video features that will likely bring some good news in the coming quarter. However, much more still needs to be done for a promising turnaround.
The bottom line: I’m still hopeful on TWTR stock.
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