TWTR Stock Gains from Insider Confidence
Twitter Inc (NYSE:TWTR) stock hit the headlines again as Twitter CEO Jack Dorsey posted a tweet declaring his love for the company and disclosing the
documents he filed with the U.S. Security and Exchange Commission (SEC) on Tuesday.
Dorsey purchased about 426,000 more shares of Twitter, amounting to almost $7.0 million. TWTR stock gained as a result of this level of confidence in the company by Dorsey. (Source: “Statement Of Changes In Beneficial Ownership,” U.S. Securities and Exchange Commission, February 13, 2017.)
The tweet evoked several reactions from users, most of them reiterating their love for the company. However, many of them also wanted Dorsey to focus full-time on Twitter instead of being a part-time CEO. The general view is that Dorsey is not able to focus on improving the microblogging service, and this has had negative impact on Twitter stock in the past.
Jack Dorsey posted the message “#LoveTwitter” on February 14, 2017.
In response, one of the users tweeted: “…if you *really* love twitter, you should focus 100% of your CEO time on it…” However, another Twitter user posted how “stunning and groundbreaking” the social media platform is.
The company’s recent fourth-quarter results have been a dampener on TWTR stock, as the company disappointed with a revenue miss and low-growth expectations. The sales and user growth figures were very low. Twitter stock plunged about 10% on the news, however Jack Dorsey has been emphasizing that Twitter is investing in its future and would turn around.
The only silver lining was user engagement, which improved in terms of tweet impressions and time spent. The company’s focus on user engagement is also positive from the point of view of attracting more advertisers.
Jack Dorsey’s Next Move for Twitter Stock
In the company’s latest shareholder letter, the management team has talked about how the company plans to apply machine learning more broadly across the Twitter service in 2017. It is critical for the social media pioneer to better identify and personalize content that users want to see.
In June last year, Twitter acquired a London-based company, Magic Pony Technology, which had developed new machine learning techniques for visual processing. This was in line with other investments that the company had made by acquiring Madbits in July 2014 and Whetlab in June 2015.
Jack Dorsey explained in his blog post that the technology would be used to build a product in which people can easily find new experiences to share and participate in. He further said that the aim was to help Twitter be the best and the first place to see what was happening and why it mattered. (Source: “Increasing our Investment in Machine Learning,” Twitter Inc, June 20, 2016.)
At the end of last year, Dorsey had requested Twitter users to send in their suggestions to improve the platform. He also posted this tweet:
Which essentially means there are problems with using the platform, and the company will be focusing on making it more user-friendly. This year, as Twitter Inc gets more into its cleaning mode, it will take some time for Twitter stock to start looking up again. TWTR stock closed at $16.74 on Wednesday, up by 1.33%.
If Dorsey can keep his promises and execute on the company’s plans in 2017, Twitter stock may have some surprises in store for investors.
Jack Dorsey and Twitter Focus on Live Video
In the recent Goldman Sachs Group Inc (NYSE:GS) Technology and Internet Conference in San Francisco, Dorsey said that it was amazing to see Twitter at the center of the most important conversations, saying, “Our greatest strength is we break news faster than anyone on the planet.” (Source: “Twitter’s CEO Says It’s Having an ‘Arab Spring’ Moment in the U.S.,” Fortune, February 15, 2017.)
There have never been questions about how unique Twitter is, but investors are concerned about whether the company can ever become profitable. This is what’s keeping Twitter stock subdued.
Twitter has started focusing on live video as a strategy to increase the user base and get more ad dollars. At the technology conference by Goldman Sachs, Twitter CFO Anthony Noto shared how the adjusted profit margins of 30% were gained from a recent football game. Twitter also attracted a record number of 5.1 million unique visitors during the Grammys.
Moreover, Noto said that Twitter plans to double the amount of live programming in 2017, partly by adding more shows in Japan and the U.K.
Noto was confident that advertisers would appreciate the enhancement in the value of Twitter’s ads. However, there could be some pain in the short term, as investments would take some time to bear fruits.
Bottom Line on Twitter Stock
Anyone who uses the microblogging platform knows the strengths and weaknesses of the service. But users also know that things can be improved and, hopefully, this could be the year when management is able to find the right strategy for Twitter.
With the current changes taking place at the company, the potential for a turnaround is huge, and Twitter stock could be a good bet for the long term.