Twitter (TWTR) has some 271 million users, but a big stumbling block for many TWTR investors has been the fact that the company struggles to make a profit despite this user base.
One new trick that Twitter has to turn those users into dollars is what seems to be a foray into online shopping, as indicated by “payment and shipping” functionality that has emerged on Twitter’s app.
But will this effort yield any results for TWTR stock, or will it just be another move that doesn’t move the bottom line?
Shopping Via Twitter
The details are sketchy, considering the report is based on user reports.
This screenshot — shared by a Twitter user a few days ago from his smartphone — shows integration of a some shopping functionality, at least on the Twitter app used by phones powered by the Google (GOOG) Android OS.
Other users have shared similar screenshots, who note that the TWTR shopping settings doesn’t actually do anything when you try to tap on them and fill out the info.
However, it has long been rumored that such efforts were in the works.
Tech site Re/Code told TWTR stock investors a few months ago that some tweets from retail sites had embedded “buy now” buttons … but like the payment and shipping info, the buttons weren’t actually usable.
And, of course, there was the shopping partnership with American Express (AXP) announced last year that would allow users to sync their card with their Twitter account and buy products via hashtag. This year, Twitter also allowed users to add products to their Amazon (AMZN) shopping cart the same way with the #AmazonCart hashtag, though they still had to actually go to Amazon.com to finalize the purchase.
Does It Matter to TWTR Stock?
Twitter stock recently has popped big-time, but many investors remain skeptical. Lawrence Meyers recently called the big stock move “nonsense” and Barron’s had a great write-up about how TWTR stock has only posted paper profits when it uses its own creative accounting methods.
So in the longer term, it is crucial for TWTR to start making some real money and justify its outrageous earnings multiple.
TWTR stock can ride the short-term momentum after earnings seemed to indicate the business is doing alright. However, investors are going to remain skeptical about the bottom line and demand real results.
If the shopping functionality is smooth and user friendly, and if enough quality merchants participate in the Twitter shopping ecosystem … then sure, maybe this means something.
But those are a lot of ifs. For now, short-term investors in TWTR stock should closely watch the charts and sentiment.
And long-term investors need to see continued user growth and monetization of the core beyond the hype of Twitter shopping to see if there really is anything worth holding on to.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.