Twitter shares were heading for the ninth consecutive day of concerns, but today marked a major turning point (at least as of this writing). The stock was up 2.14% at $19.08 per share about an hour before the market’s close. Analysts from multiple firms have been warning that the platform may be heading toward becoming obsolete, although there is still a surprising number of analysts in the bull camp.
This week at least two analysts who haven’t given up on Twitter yet have released positive reports despite the virtual bloodbath in its stock price.
Survey suggests Twitter may be the next MySpace
Mizuho analysts released the results of their recent social media survey this week, reporting that they learned that Twitter is no longer in the top four social media apps. Unsurprisingly, Facebook holds the top two spots with its own app and the Instagram app, followed by LinkedIn and Pinterest. Mizuho Securities analysts said they want to see Twitter show signs of “sustained user growth,” echoing comments from pretty much every other firm under the sun. Plateauing user growth has plagued the micro-blogging platform since its initial public offering in November 2013.
The longest stretch of consecutive days in which Twitter shares declined was nine days, which means that if the stock hadn’t reversed course midday, it would have matched the record for the longest consecutive decline. The previous nine-day decline happened in May 2014. So far year to date, Twitter hasn’t recorded a gain, and since Jan. 5, it has hit new record lows each day.
Over the last nine days, the micro-blogging platform’s stock has tumbled by more than 20%, leaving still lots of room for the shares to make a total recovery.
Twitter’s dive “undeserving”?
Not all of Wall Street is bearish on Twitter despite the user growth problems, as a surprising number of firms still see promise despite all the bad signs. JPMorgan analyst Doug Anmuth sides with the bull camp, saying this week that he thinks the micro-blogging platform is changing how people communicate and that it is still “in the early stages of monetization, with considerable runway ahead,” he said.
Also a post on Profit Confidential called selloff in Twitter stock “undeserving,” as it comes on the heels of last week’s crash in the Chinese market. Author Palwasha Saaim noted that the micro-blogging firm isn’t the only one that has taken a hit and that all of the biggest names in the Technology sector have sustained declines. The writer further says that it’s just a “fallacy” to claim that this latest stock dive is due to the company’s underlying fundamentals.
Will the new ad products be enough?
Profit Confidential praised CEO Jack Dorsey for what he’s done following the resignation of Dick Costolo. He’s made quite a lot of changes with new products like Promoted Moments, Happy Tweets, Promoted Tweets and Conversational Ads, which places call-to-action buttons on advertisements so that marketers can more easily engage with Twitter users. Saaim calls it a “unique” feature that isn’t available on other platforms and noted that other steps like monetizing logged-out users should also help.
Twitter also announced that it has begun integrating Periscope into its main platform, which is another very important step. Videos have become the next big thing in the area of social media advertising, and Google’s YouTube and Facebook’s Instagram are helping their respective companies take advantage of this. It remains to be seen whether Periscope can help Twitter find some measure of success in online video advertising as it desperately needs a win to gain back the confidence of investors.