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Will Twitter's Proposed Subscription Model Achieve Success?
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Twitter Inc. is contemplating on developing a premium version of Tweetdeck interface, for which the company will charge subscription fees. Tweetdeck helps users navigate Twitter and the premium version will probably be ad-free.
But will this move be successful in reinvigorating Twitter’s dwindling top-line growth?
We believe that this is a tough proposition considering Twitter’s meager user growth amid significant competition from Facebook . The complex nature of Twitter’s service has been often considered as a major hindrance to user growth.
With 319 million users, Twitter trails way behind Facebook, which has over 1.8 billion users. Even Facebook’s subsidiary, Instagram has over 600 million users. In the trailing 12 months, Twitter’s Monthly average users (MAUs) increased only 14 million as compared with Facebook’s massive 269 million.
This has also affected top-line growth, particularly Twitter’s, which is significantly dependent on advertising revenues (roughly 90% of total revenue) as compared with Facebook. We note that the social-media giant’s revenues have jumped almost 50% in last 12 months to $8.81 billion as compared with roughly 1% growth to $717 million for Twitter.
The sluggish user and top-line growth has impacted stock price. Twitter shares have declined 6.1% as compared with the Zacks Internet Software industry’s increase of 10.5%.
Twitter Losing Ad revenue Share
No doubt, Alphabet’s (GOOGL - Free Report) Google division and Facebook will continue to dominate the digital ad revenue market for the next several years. However, Twitter is now anticipated to lose market share due to intensifying competition from Snapchat.
As per research firm, eMarketer, Snapchat-parent Snap Inc.’s (SNAP - Free Report) ad revenues for the current year are projected to be $770 million, up 157.8% over fiscal 2016. The revenue figure is expected to hit $1.30 billion in 2018 and $2.20 billion in 2019.
Meanwhile Twitter’s ad-revenues are expected to decline from $1.36 billion in 2016 to $1.30 billion in 2017. The figure is expected to remain flat in 2018 and increase slightly to $1.31 billion in 2019.
Twitter’s mobile ad revenue market share is anticipated to decline from 2.6% in 2016 to 1.4% in 2019. In comparison, Snap’s will increase rapidly from 0.6% to 2.7% in the same period.
Can Twitter Rebound?
Twitter’s shares have recently been hit by several issues like terrorist accounts, bot problems and the top-level management exodus. However, the brand’s popularity is hard to ignore as it has emerged from being a mere messaging platform to a powerful sociopolitical tool in the recent years.
We believe that the subscription model can find takers among professionals, who prefer to work in an ad-free environment. A tiered pricing structure with additional features, much like LinkedIn, can actually help Twitter to attract new users. Moreover, the company’s focus on promoting live video streaming will help the company to remain competitive in the market.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
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Will Twitter's Proposed Subscription Model Achieve Success?
Twitter Inc. is contemplating on developing a premium version of Tweetdeck interface, for which the company will charge subscription fees. Tweetdeck helps users navigate Twitter and the premium version will probably be ad-free.
But will this move be successful in reinvigorating Twitter’s dwindling top-line growth?
We believe that this is a tough proposition considering Twitter’s meager user growth amid significant competition from Facebook . The complex nature of Twitter’s service has been often considered as a major hindrance to user growth.
With 319 million users, Twitter trails way behind Facebook, which has over 1.8 billion users. Even Facebook’s subsidiary, Instagram has over 600 million users. In the trailing 12 months, Twitter’s Monthly average users (MAUs) increased only 14 million as compared with Facebook’s massive 269 million.
This has also affected top-line growth, particularly Twitter’s, which is significantly dependent on advertising revenues (roughly 90% of total revenue) as compared with Facebook. We note that the social-media giant’s revenues have jumped almost 50% in last 12 months to $8.81 billion as compared with roughly 1% growth to $717 million for Twitter.
Twitter, Inc. Revenue (TTM)
Twitter, Inc. Revenue (TTM) | Twitter, Inc. Quote
The sluggish user and top-line growth has impacted stock price. Twitter shares have declined 6.1% as compared with the Zacks Internet Software industry’s increase of 10.5%.
Twitter Losing Ad revenue Share
No doubt, Alphabet’s (GOOGL - Free Report) Google division and Facebook will continue to dominate the digital ad revenue market for the next several years. However, Twitter is now anticipated to lose market share due to intensifying competition from Snapchat.
As per research firm, eMarketer, Snapchat-parent Snap Inc.’s (SNAP - Free Report) ad revenues for the current year are projected to be $770 million, up 157.8% over fiscal 2016. The revenue figure is expected to hit $1.30 billion in 2018 and $2.20 billion in 2019.
Meanwhile Twitter’s ad-revenues are expected to decline from $1.36 billion in 2016 to $1.30 billion in 2017. The figure is expected to remain flat in 2018 and increase slightly to $1.31 billion in 2019.
Twitter’s mobile ad revenue market share is anticipated to decline from 2.6% in 2016 to 1.4% in 2019. In comparison, Snap’s will increase rapidly from 0.6% to 2.7% in the same period.
Can Twitter Rebound?
Twitter’s shares have recently been hit by several issues like terrorist accounts, bot problems and the top-level management exodus. However, the brand’s popularity is hard to ignore as it has emerged from being a mere messaging platform to a powerful sociopolitical tool in the recent years.
We believe that the subscription model can find takers among professionals, who prefer to work in an ad-free environment. A tiered pricing structure with additional features, much like LinkedIn, can actually help Twitter to attract new users. Moreover, the company’s focus on promoting live video streaming will help the company to remain competitive in the market.
Currently, Twitter carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>