Twitter Inc (NYSE:TWTR) is the only major player in the burgeoning digital ad world experiencing negative ad revenue growth. User growth is just moving along at a snail’s pace (3-5% each quarter, versus 16% over at the much bigger Facebook Inc (NASDAQ:FB)). Engagement growth is slowing. The company still doesn’t run a profit. And TWTR stock trades at nearly 60-times this year’s earnings.

These are just some of the reasons I’ve been bearish on Twitter for some time.

But even as a long time bear, I do think that Twitter has a huge opportunity over the next several years to turn its business around. If management appropriately capitalizes on that opportunity, profitability could soar and TWTR stock could break out.

What exactly is that opportunity? Data.

If you want to see what people think about the new season of Stranger Things, go to Twitter, search “Stranger Things”, and see what people are saying. If you want to see what people think about the queso at Chipotle Mexican Grill, Inc. (NYSE:CMG), go to Twitter, search “Chipotle queso”, and see what the reaction is.

The World Of Data-Driven Decision Making

Twitter is slowly figuring out that all this data put together is a valuable asset.

Media companies would love to get access to all that data to understand what content to produce. If I’m Walt Disney Co (NYSE:DIS), I would love to scrape Twitter data to see if consumers are currently more into superhero movies or family dramas and produce content accordingly.

Consumer goods companies would likewise benefit from access to all that data to understand what goods to produce. If I’m Nike Inc (NYSE:NKE), I would jump at the chance to scrape Twitter data to see what aspects of certain sneakers consumers like, and create new sneakers accordingly.

This is all falls under the broad umbrella of data-driven decision making. And as we enter this world, Twitter’s underlying data becomes more and more valuable.

Data Is The Key To Twitter’s Future

All that is why — despite steady declines in Twitter’s digital ad revenue business — Twitter’s data licensing business has been booming. It now accounts for 15% of the company’s total revenues, versus less than 12% just a year ago.

Better yet, data licensing is a much higher revenue stream. According to Twitter management, each dollar of data revenue is equivalent to $3 to $4 in digital ad revenue, given profitability differences.

What Twitter needs to do is pivot their business model from digital ads (where they’ve been getting killed by Facebook) to data licensing. That doesn’t mean kill the ads business. It just means prioritize data licensing growth. If they successfully pioneer this new era of data licensing without completely killing their ad business, revenues will boom, margins will expand, and profitability will soar.

Consequently, if TWTR can pull this pivot off (and there are certainly reasons to think it can given the problems the digital ad industry has faced recently), then TWTR stock could be worth a lot more than it is today.

Bottom Line on TWTR Stock

Having said all that, I’m still bearish on TWTR stock in the long haul.

In order for the data licensing pivot to be successful, Twitter needs user growth. Why? Because Facebook could easily pivot into the data licensing game and crush Twitter. They have a similar data set and a lot more data.

So in order for Twitter to compete at scale, the company needs user growth. But user growth has been moving along at a snail’s pace recently, and with Chief Operating Officer Anthony Noto leaving to head another company, the user growth outlook isn’t promising.

In other words, data could be the key to TWTR stock breaking out. But only if user growth accompanies Twitter’s pivot into data licensing.

As of this writing, Luke Lango was long FB.