What is Twitter (TWTR) worth? That’s one of the most popular questions on Wall Street right now as far as investing in social media goes.
MKM Partners analyst Rob Sanderson recently made a point to investors about the worth of twitter, claiming Twitter stock could be worth either $100 or $10 depending on its success in improving the user experience.
Not that I’m riding with the crowd, or MKM’s analyst, but that is more or less the truth — social media is a business of user experience.
And if Twitter won’t get it right, investors have no business in it. And right now, Twitter isn’t getting it right, which is why Twitter stock is down more than 30% year-to-date. And just to narrow it down, there’s at least one huge handicap standing in the way of Twitter stock.
Horrible and Discouraging Engagement Stats
Like it or not, this part intimidates the average Internet user: Why should they care about Internet marketing jargon or be expected to understand what “impressions” and “total engagement” mean? Simple phrasing such as “total views” and “total clicks” would do.
In my opinion, though, the engagement stat should only be available to those — marketers — who activate it in their account settings. Only folks who use twitter for professional purposes need this option. It simply does not engage the majority of users.
Before the introduction of the engagement stat, people tweeted with the intent that they have sent something for the whole world to see, without even taking into consideration how many followers they have. I used to feel this way, I bet you once did, too.
That would have somehow encouraged people to keep on tweeting. Since the tweet activity option became available to all, however, users woke up to the reality that their tweets don’t have nearly the traction they hoped.
For instance, although I have just over 200 followers, one of my tweets has only 44 impressions with one engagement. Even if I don’t get what these terms fully mean, I’m deterred from tweeting further.
And when you consider that statistics have it that the average number of followers per user is 208, about the same amount of followers I have, I believe that most users are also discouraged to tweet more, and will spend less time on Twitter.
The bad part of this issues is that even if Twitter removes this, the memories of how only a few people saw our tweets would stick with us for some time.
But it is possible.
Twitter Stock Can Be Worth $100
Sure Twitter stock isn’t impressive right now, but don’t count it out just yet. Even if it’s not at Facebook’s (FB) level, TWTR definitely has a big audience that we can’t neglect.
You don’t attract such big audience if you’re mediocre. We have to remember that Twitter stock has some impressive platforms like Periscope and Moments through which it can boost engagement gradually.
The first part of this piece isn’t to tell you that Twitter is done. It’s just to show you that it has made some bad choices, which will linger for some time. Hence, investors shouldn’t expect anything sweet from TWTR stock in the near term. So if you’re looking for short-term gains, forget TWTR stock
But when you take the size of its platform into account, Twitter stock trades at a discount, and long-term investors might want to consider it.
As of this writing, Craig Adeyanju did not hold a position in any of the aforementioned securities.
