Social media giant Twitter (NYSE:TWTR) is stepping up its game on the platform house-cleaning front, whether that will help Twitter stock remains to be seen.

The 2016 Presidential Election popularized the fake news problem, and fake news issues lingered for a while until it all came to head earlier this year with the Facebook (NASDAQ:FB) and Cambridge Analytica scandal.

Since then, internet platforms of all sorts have attempted to clean up their platforms, and one of the front-runners in this clean up process has been Twitter. The company has increased account verification security measures, deleted a whole bunch of fake accounts, and is monitoring activity more closely than ever before.

But do the sum of these initiatives mean anything for Twitter stock? Will “cleaning up” the platform send Twitter stock higher?

I’m not so sure about that. This clean-up process will make for a nicer and more genuine user experience. That will create some positive benefit to current user engagement, but won’t do much on the adding new users front.

The clean-up efforts should also attract more advertisers, but only to a limited extent because every other digital advertising platform is also cleaning itself up, so the competitive playing field remains level.

In other words, Twitter’s clean-up will only be incrementally positive for the financials. Considering Twitter stock is trading at valuation levels it hasn’t seen in several years, an incremental boost to the financials won’t move the stock here and now.

Here’s a deeper look.

Twitter Needs to Clean up

Jonathan Swift wrote once that, “Falsehood flies, and the Truth comes limping after it.”

As The Atlantic’s Robinson Meyer astutely points out, that is exactly how news travels in today’s social media dominated world.

A massive fake news study conducted by MIT researchers the like of which has never been done before found that a false story on Twitter reaches 1,500 people six times quicker than a true story. Across every industry, the researchers discovered that false stories outperformed true stories.

In other words, Twitter is a place where falsehoods fly, and truths come limping after.

That means Twitter needs to clean up its platform in order to have a valuable platform. After all, Twitter’s business model is all about data, either selling targeted advertising solutions (which are created using data) or outright selling user data to third-parties. If that data isn’t genuine, then it isn’t very valuable.

Twitter is doing is a good job thus far of cleaning up its platform. Twitter has deleted a whole bunch of fake accounts that were just spam-bots. 

It also has suspended a bunch of accounts that were deemed as spewing hateful content.

To prevent further abuse on its platform, Twitter is upping account verification and sign-up security measures, in addition to closely monitoring activity on the platform.

The sum of these cleaning efforts will enhance the user experience, increase present user engagement, and keep the company’s data genuine. But will any of these changes materially impact the financials or Twitter stock?

But Clean Up Won’t Help Twitter Stock

In my opinion, all these clean up efforts are necessary, but they won’t do much in terms of boosting the numbers or boosting the stock.

Daily user engagement will likely go up as a result of an enhanced user experience that dis-includes fake content. But will that increase in usage be all that meaningful? Probably not.

If falsehoods travel more quickly than truths, then getting rid of the falsehoods and boosting the truths won’t likely cause a surge in engagement. At best, users just view Twitter as a more trustworthy news source, and thus check their Titter accounts more frequently.

These clean up efforts won’t do much for user growth. Twitter’s user base has been stuck in the 300-330 million range for a while now, and a “cleaner” platform won’t change that. They may attract more advertisers, but everyone else is also cleaning up their platforms.

For example, Facebook deleted nearly 600 million fake accounts in the first 3 months of 2018, so its not like Twitter has some “truth” advantage now.

Overall, the net result of these clean-up efforts will likely be slightly higher daily user engagement and maybe a slightly higher ARPU. Those changes aren’t enough to move Twitter stock higher, especially since this 2018 high-flyer sports a 60-times forward multiple, versus 26 for Facebook and 25 for Alphabet (NASDAQ:GOOG).

Bottom Line on Twitter Stock

Twitter is doing a great job at cleaning up its platform, and that is a really good thing from a social and ethical standpoint.

But from a financial standpoint, this clean up won’t impact the numbers all that much. And from an investment standpoint, it won’t be a catalyst which sends Twitter stock higher.

As of this writing, Luke Lango was long FB and GOOG.