Twitter Stock Bounces Back
If there’s one thing America loves, it’s football. So by extension, America now loves Twitter Inc (NYSE:TWTR), which is the new home of Thursday-night National Football League (NFL) action. A day after the first game was live-streamed, Twitter stock (TWTR) jumped 4.4%.
The event was widely celebrated as a success, but I’m not sure that Twitter stock bears are too happy about it. They kept saying TWTR stock had nowhere to go but down, yet this recent success suggests exactly the opposite.
Live-streaming popular events would turn Twitter into a TV channel. It would mark a significant rise in the stock’s outlook. User engagement would likely increase, subscriber growth would restart, and TWTR stock would surge.
In other words, this is the stuff of nightmares for Twitter stock bears. (Source: “More than 2 million people watched Twitter’s NFL stream on Thursday night,” recode, September 16, 2016.)
More than two million people watched the NFL game on Twitter. The numbers were dwarfed by how many people watched the game on TV, but it was an impressive turnout nonetheless. Twitter had a sizable reach, even when measured by the same standards as Nielson ratings. Twitter had an average of 243,000 people watching at any given time, whereas CBS had 15.4 million.
The gap is expected to close over time. Even though consumers are used to the idea of watching movies and TV shows online (Thanks, Netflix, Inc. (NASDAQ:NFLX)!), they haven’t grown accustomed to the notion of live-streaming sports.
It’s not their fault. The problem is that major athletic associations—like the NFL and the National Basketball Association (NBA)—are tight-fisted with their broadcasting rights. They have been reluctant to accept streaming platforms as worthy outlets for their content. In that light, Thursday night’s game was a landmark moment.
Twitter had to edge out Facebook Inc (NASDAQ:FB) and Apple Inc. (NASDAQ:AAPL) in order to secure this contract, but it could very well become the company’s saving grace. Many expect it to pave the way for a full-blown revolution in sports broadcasting.
As such, investors are cautiously optimistic about TWTR stock.
Even if costs spike in the short term, Twitter could eventually charge advertisers for front-roll or mid-roll ads on their platform. These ads bring in a lot more money than Twitter’s current ads, meaning the company has finally found a path to profitability.
It’s safe to say that Twitter stock will live or die by this endeavor. The company has spent far too long in the bargain bin of the stock market.