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Can Twitter's New Features Give it an Edge Over Facebook?

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Twitter (TWTR - Free Report) continues to add new features to its platform to boost user growth rate and engagement levels.

The company’s CEO Jack Dorsey and product manager, Sara Haider recently hinted at bringing two new features — presence and reply threading — when they tweeted about it on the platform.

With the presence feature, Twitter users can now see if other users are online. The feature, which faced criticism amid ongoing user security issues, can be used at the discretion of the user, per Haider.

Reply threading will make it easier for users to completely follow a particular conversation, akin to the feature offered by its rival Facebook (FB - Free Report) , which currently has a Zacks Rank #4 (Sell).

Notably, these features will be tested before rolling them out to the general public.

Live Streaming to Boost Ad Revenues

Twitter is continuously bringing in new features to its platform to diversify itself from a mere micro blogging site to a destination for video and live streaming, which seems to be working in its favor.

The company has been focusing on "live" to turn around its fortunes. Live streaming has resulted in an increase in user engagement, thereby driving ad revenues. Notably, ad engagements increased 81% year over year in the last reported quarter.

Additionally, the company locked down deals with the likes of Activision (ATVI - Free Report) and Fox Sports to air live content on its platform. Twitter will air Activision’s Overwatch League’s highlights and live content and Fox Sports’ FIFA World Cup-related shows.

Moreover, Twitter also inked new deals with Major League Baseball and Major League Soccer, along with NBCUniversal, Viacom and Disney (DIS - Free Report) among others. Notably, Twitter signed 50 new live-streaming agreements in the second quarter.

Twitter’s push into the video streaming segment will make its advertising business (84.5% of total revenues) even more lucrative. Especially, video ads, which accounted for more than half of ad revenues in the last reported quarter, remained Twitter’s fastest-growing ad format.

Moreover, Twitter’s efforts to boost user growth rate and engagement levels by bringing in new features coupled with engaging content is expected to help the company improve user growth rate going forward, eventually driving top line.

Twitter, Inc. Revenue (TTM)

Twitter, Inc. Revenue (TTM) | Twitter, Inc. Quote

Competition With Facebook Remains Stiff

Even though Twitter is inking multiple deals in the live streaming segment, it still has a long way to go before it can match up to its main social media rival, Facebook, which continues to lock exclusive deals to gain a competitive edge.

Notably, Facebook inked an exclusive deal with the Union of European Football Associations (UEFA) to air 32 live matches every season starting Aug 15, 2018 till 2021 in the Latin America region. The deal also includes match highlights on Wednesday and match of the week programs.

Additionally, the company also inked deal with Spain’s elite soccer division, La Liga, to air the upcoming three seasons of the tournament in India. This remains a concern for the likes of Twitter as Facebook is replacing Sony for the La Liga deal to become the exclusive content provider.

We expect the competition to intensify between Twitter and Facebook as both look forward to gain audience, especially in the sport markets, which is evident from the recent deals.

Twitter currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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