Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

How Twitter Is Expanding Its Niche


As its stock shows signs of a comeback, big plans for the future.

Twitter (NYSE:TWTR) stock caught an upgrade to "buy" from "neutral" earlier this week, but the analyst call came with a backhanded slap: "We believe that the market has now priced in the expectation that Twitter remains a niche social-media product," Nomura analyst Anthony DiClemente wrote.
Nomura kept its Twitter price target at $43. "We believe that risk/reward is much more favorable now, given the possibility that product enhancements rejuvenate user growth," DiClemente said.
In other words: We're hoping we're wrong, but this isn't looking like another Facebook (NASDAQ:FB).
Twitter's stock has climbed about 10% since then, closing Thursday at just above $34 per share. But it's still down almost 50% since the start of the year, while the S&P 500 (INDEXSP:.INX) has risen 4%.
Poor Twitter. It added 14 million more users in the first quarter, bringing its user base to 255 million. Its revenue was up 119% year-over-year, to $250 million. Total views of its pages reached 157 billion, an increase of 15%. And it still can't escape the comparisons with Facebook's billion-plus user base. So, the idea is that investors might as well accept Twitter as a niche product.
Nomura is not the only analyst firm to point out that size isn't everything in social media. Earlier this month, Pivotal Research analyst Brian Wieser upgraded Twitter to "hold" from "sell." He also had a backhanded compliment for the site: "Our view is that whether Twitter was the same size or even double its current size, its relative role in the advertising landscape (and the potential ad revenues the company would generate) would probably not be substantially different."
Still, this niche product ranks 12th on the list of the world's most-visited websites, compiled by Web traffic data firm Alexa. And the company is doing plenty to keep its position, or maybe even move up in the rankings.
Tweaking the Timeline
Twitter now displays updates in a purely democratic fashion. Probably too democratic, in a world that includes plenty of cranks, spammers, and miscellaneous mischief-makers. Now Twitter users see all posts, or "tweets," from people and organizations they follow in chronological order, newest first. The company is working on adding an algorithm that would introduce some prioritization so that users will see more relevant posts first.
"We're already experimenting with delivering that kind of algorithmic content into the timeline based on relevance, based on other people you follow," CEO Dick Costolo said at Re/code's Code Conference in California this week. "We will look for the right balance of manual curation and algorithmic injection."
Focus on Emerging Markets
Twitter is seeing slowing growth in the US, but it's gaining users fast throughout Asia and Latin America, according to a new report from research firm eMarketer. In fact, its five fastest-growing countries this year will be Indonesia, India, Argentina, Mexico, and Brazil, according to the report. By the end of this year, about a third of Twitter's user base will be Asian, despite tough homegrown competition and an official ban on the site in China.
At the Re/code conference, Costolo said his company is in the "very beginning states of conversations" about what a Chinese Twitter site would look and feel like. He said the company has no immediate plans to enter the Chinese market. However, he visited the country recently to meet with advertisers there. The company also is reaching out to the next wave of mobile users through agreements with carriers to offer a stripped-down version of Twitter free of data charges.
Through the program, Twitter is now being accessed by people in countries including Uzbekistan, Pakistan, Nepal, and the Philippines. Twitter Zero follows in the footsteps of Facebook Zero, which was introduced in 2010.
Growing Mobile Advertising
Twitter bought the mobile advertising exchange MoPub last September, and this week it announced its first mobile-related deal with an advertising holding company. The two-year, $230-million agreement with Omnicom Media Group (NYSE:OMC) will integrate that company's mobile advertising arm, Accuen, with Twitter's MoPub. The agreement gives Omnicom agencies access to the exchange, locked-in ad rates, and "first look" rights to any new ad opportunities developed by Twitter.
Mobile advertising accounted for 80% of Twitter's ad revenues in the first quarter of this year.

More tech stories:

Google's Self-Driving Car: Now Without a Steering Wheel!
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos