Twitter Inc - Stocks

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Social media has played a huge role in bridging communication gaps and making the world a global village. A few decades back, people could only connect and interact with few other people and that too only through a wired connection. But as telecommunication and computing got advanced, people got to understand the dynamics of interacting through the internet and mobile phones.

Today, people can use the social media platform to not only connect with their family and friends but reach out to a larger audience. Apart from social interaction, even all types of businesses are using social media platforms to address a large target audience and generate leads, sales, and revenue and also increase public awareness.

Twitter is one of the most popular social networking platforms, along with Facebook. Twitter is an online American social networking and microblogging service where people from all around the world can log in and interact by writing posts that are called ‘Tweets.’ Twitter gives freedom to people to express their views, opinions, and thoughts on anything and everything. Users can also easily share posts, pictures, and short media clips.

Twitter was formed in 2006, and it is headquartered in San Francisco, California. Twitter has 35 regional offices in different parts of the world and has 4,600 employees. According to facts, there are more than 1.3 billion user accounts on Twitter, of which nearly 45% of users made an account and left before sending even a single tweet. However, there are more than 330 million monthly users and 145 million daily Twitter users. Nearly 80% of users access Twitter using their smartphones or any other mobile device.

The US is the country with the most active Twitter users that are $62.55 million, followed by Japan with 49.1 million. Almost 22% of Americans use Twitter frequently. The most followed and influential people on Twitter include singer Katy Perry, Justin Bieber, Lady Gaga, Cristiano Ronaldo, Kim Kardashian, and Taylor Swift.

Twitter has quickly become the most relevant and vital social media platform, particularly for domestic and international politics. Twitter has played an enormous role in increasing awareness among the local population of every country, whether it is political or social issues.

According to statistics, nearly 500 million tweets are posted in a day, and almost 6000 tweets every second from different parts of the world. It would take a person 3 years, 2 months, and a day from going from one tweet to the billionth tweet. The tweets featuring any image are shared the most or gets 150% retweets.

Twitter is a fairly young organization but has quickly become one of the biggest US companies based on market capitulation. Twitter generates most of its revenue from online advertising. The daily monetizable active Twitter users, according to the recent quarter, are 186 million. Twitter is used 31% by people who are between the ages of 25 to 34.

Twitter is actively used during any live or upcoming global events, whether it is Elections, any highest-grossing Hollywood movie such as Avengers: Endgame, any Sporting fixture or event such as UEFA Champions League of World Cup Football, or any popular TV show such as Game of Thrones or Money Heist. More than 80% of world leaders have a Twitter account.

History of Twitter

Twitter was formed by Jack Dorsey, Noah Glass, Evan Williams, and Biz Stone in March 2006 in San Francisco. The Twitter website was officially launched in July 2006. The social network was designed on the concept of SMS (Short Message Service), where people could chat and stay connected.

Dorsey put forward his idea to the company he was working in called ‘Odeo Inc.’ and was asked by Biz Stone and Evan Williams to spend more time on the project. The complete version of Twitter debuted in March 2007 during the South Music Conference in Texas. The launch was very successful, as almost 60,000 tweets were sent during the conference. In 2008, Twitter showed 100 million tweets per quarter, and by February 2010, Twitter users were sending 50 million tweets every day.

Twitter fame grew worldwide, and many people from across the globe liked the whole concept of sending messages in real-time and expressing views on any major domestic or international event. In 2012, Twitter had over 100 million users who posted more than 340 million tweets every day. In 2013, Twitter became the second most popular social media website, and among the ten most searched website.

Before its Initial Public Offering (IPO), Twitter’s operations were managed by venture capital, and the company got $57 million of investment. In September 2013, Twitter announced that it had planned a stock listing in compliance with US Securities and Exchange Commission, and Twitter expected to raise $1 billion. On November 6, 2013, Twitter issued 70 million shares valued at $26 per share.

Twitter has a remarkable logo or icon called ‘Bluebird’, which is recognized as the most impactful logos in the corporate sector. The symbol of Twitter represented a bird and became the mascot in 2010. Twitter bought the logo from iStock for $15, and it was designed by Simon Oxley. The word tweet is also symbolic of the sound made by birds.

November 7, 2013, was the first day of trading on the New York Stock Exchange (NYSE), and Twitter shares opened at $26 and closed at $44.90, and the business valuation was estimated at $31 billion. The stock value of Twitter surged and reached a high value of $73 in December 2013.

However, Twitter suffered an enormous loss of $511 billion in the fourth quarter of 2013, and the stock value started to lose its initial success by the end of 2014. There was constant volatility in the market, and the Twitter share price dropped to as low as $14 in May 2016. But from the start of 2017, the Twitter share price has improved and seen frequent uptrends amid some small downturns. Some of Twitter’s acquisitions include

• MoPub, a mobile advertising company in September 2013 for $350 million
• Gnip, a data reseller in April 2014 for $134 million
• Niche an advertising firm for social media stars in February 2015 for $50 million.
• Periscope, a live video streaming application in March 2015
• Magic Pony, artificial intelligence and machine learning startup for $150 million
• TellApart, an advertising company in April 2015 for $480 million

Current Business and Investment of Twitter

Twitter is one of the most actively used social media websites. The platform has a simple user interface that allows people to easily express their thought, feelings, and opinions about anything. People can tweet, reply, and share tweets in real-time. Twitter is the most used online platform when it comes to live events such as sports games, breaking news, and entertainment news.

Twitter has portfolio of products and services that includes Periscope, Promoted Trends, Promoted Tweets, and Promoted Accounts. Periscope is an online mobile application that allows more than 10 million users to stream video.

The ‘Promoted’ services segment of Twitter provides an opportunity for users and businesses to market and advertise their products, services, and brands. The ‘Promoted’ service allows business organizations to reach to a wider audience and improve sales. The Promoted accounts appear on the home page or timeline of many users and under the heading ‘Who to Follow’ recommendation.

The Promoted trends usually appear for the entire day on the timeline of users residing in a particular country. If there is a global event, then a global trend is made which many people use to express their sentiments.

Like other social media platforms, a user has to give his valid email address to make an account on Twitter. Since its beginning, a single tweet was limited to only 140 characters, but it was doubled to 280 characters in 2017. The audio and video clips, however, are still limited to 140 seconds for most users.

Risk and Potential in Twitter Environment

Twitter reported a revenue of $3.46 billion in 2019. The net income of Twitter in 2019 was $1.47 billion, and total assets were $12.703 billion. Twitter has worldwide popularity and recognition, and millions of people actively used the Twitter platform every day. SWOT analysis is a common management tool that helps business companies to evaluate their productivity and implement strategies for future growth. The SWOT analysis of Twitter is given by

• Strengths

Twitter has a global fan base, and millions of people from all parts of the world use the platform to express their views openly. Twitter is used by many popular celebrities and world leaders. The simple user interface allows users to easily use its features and functions such as ‘Hashtags’ and Periscope. Twitter is valuable for business companies and influential people to address a wide audience. Users can write text and upload both pictures and short video clips. The ‘Bluebird’ logo of Twitter is highly recognized all over the world.

• Weaknesses

Twitter’s weakness lies in fake accounts, online harassment, and user data safety issues. Twitter relies heavily on the US market for revenue generation. Also, a large portion of revenue comes from online advertising. There is a lack of diversity, and if in the future, any better social platform comes, than Twitter could lose its user base and market share.

• Opportunities

Twitter can ask more celebrities and big organizations to operate their accounts that can drive new users to make accounts too. The company can integrate with telecom companies and allow easy access to users who live in remote areas where there is no wired or Wi-Fi connection. Twitter can bring new features and innovate to retain its user base. Twitter can offer dynamic marketing solutions that can allow businesses to boost sales. The company could implement strict rules for fake accounts and tweets, along with reducing the online abuse and harassment. Twitter could allow users to increase the personalization of their profiles.

• Threats

Twitter faces most competition from fellow American social media network ‘Facebook’ and other popular social media platform that includes Snapchat, WhatsApp, Instagram, YouTube, and Tik Tok. The data leaks and fake accounts damage the reputation of Twitter, and many users either leave the platform or use Twitter infrequently. The company also has to deal with stringent rules and policies from regulatory authorities.

Stock Analysis of Twitter

Twitter is listed and actively trades on the New York Stock Exchange (NYSE) with the ticker symbols ‘TWTR.’ The company is listed under the ‘Technology Services’ Sector, and the industry is ‘Internet Software/Services.’ Twitter is also a member of other indices, such as the S&P-500 Index.

The all-time high share price of Twitter was $73.31 on December 26, 2013, and the average price in the last 52 weeks is $33.54.

The quarterly financial performance and earnings report are two crucial factors that help to determine the stock value of Twitter shares. As Twitter is an online social media platform, the amount of active users varies, and changes after every month. The investors need to put a close eye on the monthly active users as it shows the growth of Twitter and if it is better to invest in the company’s stock or not.

Twitter released its second-quarter on July 23, 2020, and the company missed expectations. Twitter generated revenue of $683 million, with a 19% decrease as expected was $707 million. The Earnings per Share (EPS) was $1.39 per share. The monetizable daily active users were 186 million while expected was 172.8 million.

Twitter reported a decline in advertising revenue, which was $562 million and decreased with 23% YoY (Year on Year). The Coronavirus pandemic has also impacted Twitter’s business, and the company could not give clear guidelines on its earnings. As being one of the leading social networks used by people nearly every day, Twitter is looking to provide reliable news and information regarding the Covid-19 outbreak to the people.

The information above is for education purposes only and cannot be considered as investment advice. Past performance is not reliable indicator of future results.