Twitter Inc (NYSE:TWTR) management said they will be focusing on upcoming opportunities, strategies and priorities when they address analysts tomorrow. There has been a lot of concern about user growth since the company’s very first earnings report as a public company, so these topics will likely make or break Twitter stock in the near term.
Twitter looks to scale
In their report dated Nov. 10, 2014, Raymond James analysts Aaron Kessler and Justin Patterson and associate Yena Jeon said in addition to what Twitter Inc (NYSE:TWTR) management has said they will cover, investors will want more visibility on other topics. For example, they want to know more about Twitter’s monthly active user growth and total addressable market.
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In addition, they want to hear more about improvements to Twitter’s user interface and initiatives to drive more user engagement. Additionally, they want to know how the micro-blogging platform will monetize logged-out users in addition to those who are logged in. Other hot topics are turnover in management and Fabric, which is the company’s new mobile developer platform.
Twitter’s strategies for user growth, engagement
The analysts believe investors remain focused on Twitter’s logged in user total addressable market and how it compares to that of Facebook Inc (NASDAQ:FB). As of the third quarter, Twitter had 63 million users in the U.S., compared to Facebook’s 206 million in the U.S. and Canada. Twitter had 121 million international users, compared to Facebook’s 1.145 billion.
Recent surveys offered some ideas about why users are hesitant to use Twitter. The survey indicated that 77% of consumers use Facebook but only 24% use Twitter. The biggest reason for not using Twitter was a view that the micro-blogging platform is a waste of time, with 52% of respondents giving that reason. In second place was simply not seeing the point of Twitter, with 36% giving that reason. Also 36% of survey participants said they get their news and information from other websites.
Twitter has already improved the sign-up process to make it easier. The Raymond James team now wants to know what else management has planned to attract users of all ages. In addition, they want to hear more about how the micro-blogging platform plans to improve usage, both among logged-out users and logged-in users.
What about monetization?
The analysts also want to hear about the potential for monetization on Twitter, especially for international users, as the monetization rate for them is much lower than it is for U.S. users. In the third quarter, the micro-blogging platform reported average revenue per U.S. user of $3.33. Internationally, Twitter’s monthly active users were monetized at a rate of 50 cents apiece.
They’re also looking for more clarity on how successful Twitter’s ad units like promoted tweets, mobile app downloads, website cards and promoted video ads are. The Raymond James team also is wondering about the timing of monetization for the Vine acquisition. Additionally, they believe investors want to know how Twitter plans to monetize logged-out users.
The Raymond James team maintained their Market Perform rating on Twitter Inc (NYSE:TWTR) leading into tomorrow’s analyst day.