Twitter Inc (NYSE:TWTR) is amongst the few online companies that have a wide base of subscribers online, and is transitioning the media platform altogether, according to a report from Baird Equity Research analysts Colin Sebastian and Rohit Kulkarni. Mobile and online advertising will benefit the micro blogging site in the future.
However, analysts are looking for more attractive buying points as investor “expectations are already trending well ahead of published estimates,” says the report.
Short messages attract more users to Twitter
Twitter Inc (NYSE:TWTR) is one of the most innovative and popular ways to convey a message and share thoughts online. The 140 character tweets fit well into its mobile version, helping it gain from increasing monetization, global device penetration, and high speed wireless networks.
One of the benefits that Twitter enjoys is that users find it pretty simple to share information through Twitter given its 140 character limited posts. Users tend to share information quickly with massive distribution. The Twitter feed provides a live broadcast of news, updates, opinions and other conversations accessed conveniently from a mobile app or (now less frequently) desktop websites.
Tough competition for Google, Facebook
Analysts believe that Twitter makes a strong platform for advertising, and that TV advertising can shift to this website given the live, structured and public nature of Tweets. Over the next decade around 5% of the $200 billion TV ad market will shift to Twitter, expect analysts.
Twitter Inc (NYSE:TWTR) feeds are a huge source of data for Twitter, as well as its partners, and it can give tough competition to rival Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB) in data content due to its short format and public orientation.
Twitter Inc (NYSE:TWTR) is one of the sites where users engage heavily. On average, a Twitter user interacts 20 times with the site a day. Also, the user base of the site is expanding rapidly including 230 million monthly active users and more than 100 million daily active users. Although the number is dwarfed by Google and Facebook, given the public orientation and expanding user base Twitter is poised to come into the mainstream.
Analysts have assigned a Neutral rating to the stock with a price target of $48. According to analysts risks that can affect Twitter’s valuation in the near term are macro factors, strong platform competitors, changing consumer habits, and monetization challenges.