Twitter Inc (TWTR) shareholders haven’t had much to tweet about since last summer. Actually, it’s been downright miserable — Twitter stock has gone from about $36 to $18.75. It was only a few years ago when the company went public at $26.
Yet new CEO Jack Dorsey — who is also the co-founder — is trying to find ways to revive the Twitter stock price.
The latest move came this week with the announcement that the company has integrated Periscope live-streaming into user profiles and timelines.
The video content will auto play and be available in the Apple (AAPL) App Store. Of course, there will be a version for Alphabet’s (GOOG, GOOGL) Android and a PC desktop version (although, TWTR did not provide any launch dates).
According to a blog post from TWTR:
“For broadcasters, this means you can reach the massive Twitter audience. And for everyone on Twitter, there’s now a richer experience in your home timeline, search results, and on anyone’s profile who’s shared a Periscope.”
What About Twitter Stock?
As smartphone use continues to grow, there has also been a shift toward video content. So the move by TWTR makes a lot of sense.
What’s more, with Periscope being a core part of the platform, this should help increase the usage. Consider that users will be able to like, retweet and comment on the videos.
Despite this, the news has not helped Twitter stock. Perhaps one reason is that the company has only indicated that there have been over 100 million broadcasts — not the user count. Also, the fact is that the rivals of TWTR have already been taking substantial share of the video opportunity.
Facebook (FB) logs a staggering 8 billion videos every day and Snapchat gets over 7 billion. And yes, Facebook is also experimenting with its own streaming service called Live. Oh, and of course, there is the mighty YouTube, which has over 1 billion users (the company does not publish the number of views).
It’s encouraging that Dorsey is trying new things and encouraging innovation. For example, he released the Moments app (which highlights interesting content) and there is even buzz that he may break the 140-limit, allowing for tweets of up to 10,000 characters.
But all this can be tricky and could mean further deterioration of Twitter stock. If there are too many changes, then users may get frustrated and confused. After all, this was a key to the downfall of MySpace, whose service became an utter mess.
No doubt, TWTR has continued to suffer from lagging user growth, which increased by a mere 8% on a year-over-year basis (as of the latest quarter). This was despite having struck a major distribution agreement with Alphabet as well as the launch of Moments.
In the meantime, other social operators have been able to crank up the growth. During the past year, FB reported a 14% increase and LinkedIn (LNKD) grew its base by about 20%.
Besides, the valuation on TWTR stock is still far from cheap, with a forward price-earnings ratio of 34. This is actually the same as Facebook, which has a massive user base, a portfolio of standout assets and strong revenue and profit growth.
In other words, for those investors looking for a play for social, FB certainly looks strikingly better by comparison.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
