Bernstein Research analysts Carlos Kirjner, Peter Paskhaver and Garrett Marks give market perform rating to Twitter Inc (NYSE:TWTR).
This report is a transcript of Bernstein Research’s recent conference call with Rob Bailey, CEO of DataSift, which they hosted to discuss how Twitter data is changing marketing, advertising and news. DataSift is a SaaS-based social data platform with access to Twitter Inc (NYSE:TWTR)’s full “firehose” of data. Analysts recently launched coverage on Twitter with a $40 price target and market-perform rating.
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Twitter’s value added services
Twitter Inc (NYSE:TWTR) provides a large and potentially valuable source of public, real-time data. Twitter makes its 500 million or so daily tweets available through a “firehose” to a small group of partners, such as DataSift. These partners in turn have established businesses to sell these data as well as value added services such as processing and enriching data to big data analytics to third parties such as advertisers, businesses seeking to monitor and manage their brand and establish stronger customer relationships and news organizations.
Twitter’s commitment to facilitate an ecosystem
While it is early in development, Twitter Inc (NYSE:TWTR) has shown commitment to facilitating an ecosystem that can aid companies trying to use its large amounts of data for business value. DataSift provides an analytics platform to aid companies in addressing the top challenges in using social data: 1) parsing Twitter’s data volume to a relevant and manageable data set 2) running additional analytics on the platform 3) facilitating compliant use of Twitter data.
DataSift believes social data platforms represent large market opportunity. Virality of social media content makes it a space with ROI implications for a company – effective use of social media for product launches and brand management can have significant results for businesses.
The ability to index and analyze unstructured data is an important capability and may be justification for Apple Inc. (NASDAQ:AAPL)’s recent acquisition of DataSift competitor Topsy, which has built unique indexing technology for searching Twitter’s content.
Twitter Inc (NYSE:TWTR) is a unique medium offering potentially attractive context for advertisers. Bernstein’s analysts believe the development of the data licensing ecosystem has important strategic implications for long term growth of advertising revenues, which comprise the majority of the company’s business. They think the company will improve user monetization and grow its user base rapidly but see concentration risk and believe the stock already prices in aggressive growth assumptions. Overall, analysts continue to believe the stock is fairly valued with a very high degree of uncertainty on both the upside and downside.