Twitter (TWTR) might still have the Monday blues like the rest of us, but at least it got a morning caffeine jolt. Shares of TWTR stock are up around 9% on Monday in the kind of bittersweet celebration that takes place only because it comes on the heels of a tragedy.
In case the weekend blurred your memory, Twitter stock has been obliterated in recent weeks thanks to slowing user growth and ongoing concerns about monetization.
In fact, shares of TWTR stock were sitting on 25% year-to-date losses heading into the weekend, with leadership and acquisition speculation running wild.
Now, though, TWTR stock is just 18% in the red year-to-date thanks to a perhaps surprising “savior”: football.
Besides the news that Twitter insiders have been snatching up shares (perhaps in a case of bargain shopping, perhaps in a fake-it-til-you-make-it morale turnaround attempt), most headlines this morning about TWTR stock have centered around a new content deal with the National Football League.
While Twitter and the NFL also struck a deal last year, the biggest differences this go-round is the fact that the deal includes more content — three times as much, to be exact, including in-game photos and video highlights — and the fact that Twitter is the one selling the advertising tied to these tweets.
In the past, Twitter and the NFL split those ad selling responsibilities — perhaps another bullet point on the list of ways the company’s monetization game has been falling short in recent years. With that in mind, the fact that Twitter is fully taking over the ad selling could be seen as progress … or increased risk.
Or it could be seen as a same story, different day situation.
NFL Deal No Touchdown for TWTR Stock
When it comes to monetization, the “who” of selling ads is but fine print. And when it comes to Twitter, one can’t help but wonder if the entire news cycle is a homogenous group shouting and tweeting into a bubble (pun perhaps intended).
Football might be the most-watched sports league, but that doesn’t mean it has unlimited growth. There’s a circle of huge football fans all shouting at each other, and within that circle is the circle of football fans on Twitter tweeting at each other. While this deal may increase their experience and juice revenues a bit by boosting engagement, “old-school” football fans who don’t use the site likely won’t even realize what they’re missing.
Put another way, this deal and others like it are little more than remixing a remix. Unless the price-tag of display ads changes dramatically, nothing is going to change dramatically.
And at 45 times forward earnings after the drop, Twitter stock is already priced for this level of “progress.”
Besides, take a minute and imagine the most bullish of scenarios that lets TWTR stock grow into that valuation: Everyone’s downloading Twitter just in time for Sunday’s kick-off. Their eyes are locked to the latest smartphone-sized replay of a something that literally just happened — that they just saw — and they’re all tweeting about what the right call will be, shoving chips and salsa in their mouths as they scroll through Twitter-sold ads, all while Twitter executives and investors cheers from atop stacks of money.
Somehow, I just don’t picture that happening.
Alyssa Oursler is based in San Francisco and writes about technology, investing, gender and entrepreneurship. Her work has appeared on Forbes, Business Insider, MSN Money and more. You can follow her on Twitter here or check out her personal site here. As of this writing, she did not hold a position in any of the aforementioned securities.
