TWTR Stock Is a TV Play
Twitter Inc (NYSE:TWTR) is an outcast on the stock market. This once beloved investment is the ugly stepchild of social media…but I think TWTR stock has been getting some plastic surgery, because it’s oddly attractive right now.
I wasn’t always such a fan of the company. Just read my review of Twitter’s second-quarter earnings if you’re skeptical. But there are rumors floating around that cast a completely new light on the future of Twitter stock.
If these rumors are correct, TWTR stock may actually become a competitor to Netflix, Inc. (NASDAQ:NFLX) rather than Facebook Inc (NASDAQ:FB), Instagram, or Snapchat. No idea what I’m talking about?
Let me explain…
In the last year, Twitter has live-streamed a number of high-profile events. They’ve aired games from the National Football League, Major League Baseball, and Wimbledon. Heck, they even had live coverage of the Democratic and Republican conventions.
Bloomberg TV (one of my favorite channels) is also pushing its live video through Twitter. All these partnership contracts have raised speculation that Twitter is turning itself into an online TV station. (Source: “Twitter may completely change how you watch (and pay for) TV,” MarketWatch, August 25, 2016.)
The idea is that hosting live content will revive enthusiasm for Twitter’s platform, boosting subscriber growth and ultimately revenues. It’s actually a brilliant plan, but for more reasons than you may expect.
Why Twitter Stock Investors Should Be Excited
At present, no one is filling this hole in the market. Netflix has shows you can watch on demand, but it doesn’t broadcast live NFL games. That’s a massive oversight for a country that lives, eats, and breathes sports.
Considering that Twitter’s entire shtick is based on the immediacy of content, live streaming is the natural extension of its platform. Think about it: the Twitter stream flows continuously regardless of whether you’re there or not.
It’s not like Facebook, which tosses the most “relevant” posts at you. The core of Twitter is in timing, in being there for a spontaneous occurrence. Before I tell you what this could mean for Twitter stock, let me tell you a quick story.
Remember the lunatic who drove through a crowd in Nice, France? As that horrific act was being committed we had a TV playing in the newsroom, and I also had a mainstream news site open on my browser. Neither of those outlets broke the story.
I first heard about it on Twitter.
Witnesses say a truck drove into a crowd in Nice, France; one man says he saw driver emerge shooting. https://t.co/qZZoGyaYwg
— The Associated Press (@AP) July 14, 2016
Granted, the tweet came from an Associated Press account, but my point is that nothing can beat the rapid response time of Twitter. Not a live television broadcast, nor a digital news site. That’s what makes this ecosystem perfect for live events.
What This Means for TWTR Stock
Investor sentiment is known for blowing with the wind, so all Twitter stock needs is a change of narrative. I think these television deals are going to be the catalyst for that change, namely because they are exactly what customers want.
Customers want more video accessible through their smartphones. The rise of Snapchat, Facebook video, and Netflix are proof enough of that, but the question is: how will that translate to Twitter’s bottom line? I have a few theories.
My main complaint about TWTR stock was the lack of advertising revenues. That’s why I hammered the company after its dismal second-quarter earnings, but it’s also why I’m turning bullish on the stock right now.
Video brings in a much higher price per ad, not to mention that it dramatically increases user engagement. Combined, both those factors could send Twitter stock surging. And if the company charges a subscription fee, there’s no telling how high TWTR stock can go.
But if your portfolio is already heavy on software bets, then maybe it’s time to turn back to hardware devices. There’s something reassuring about knowing that a tech stock can still outperform while selling a real product that you can touch and feel.
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