- Twitter's recent wins on the live streaming front could be the first signs of a turnaround.
- These wins will likely lift ad-spends on the platform even after the presidential debates.
- Twitter shares could remain volatile in the near term, given the incessant buyout chatter.
News sources are buzzing with stories about the growing viewership of the presidential debates on Twitter (NYSE:TWTR). The numbers look good, and the debates, with one more to come, will likely be a big catalyst for Twitter's results in the near term. Going beyond the presidential debates, stats pertaining to Twitter's NFL streaming show that live streaming is finding growing adoption on the platform. Given the other events Twitter has lined up, higher engagement could bring back ad Dollars. Even as incessant buyout rumors continue to do the rounds, it seems as if the first signs of a turnaround are emerging for Twitter.
The Winner Of The Presidential Debates Is Twitter Inc
As we'd anticipated, the presidential debates are turning out to be a handy tailwind for Twitter. With growing viewership, record engagement levels and sold-out ad-inventory, the debates are just what Twitter needed. Based on numbers provided by Twitter, the second presidential debate on Sunday reached an audience of 3.2 unique viewers, up from 2.1 million viewers during the first presidential debate. Viewership rose 30% in terms of total reach. The other metric to note, Average Minute Audience (AMA), more comparable with TV audience ratings, shows a 7% jump in viewership. AMA is basically audience per minute during the course of the event.
AMA during the second debate rose to 369 thousand, from 344 thousand during the first debate. In all, the second debate triggered over 17 million debate-related tweets, which were reportedly seen over 3.6 billion times globally, on and off the platform. That's a healthy uptick from 500,000 tweets generated by all four debates put together in 2008, and the 2012 peak of 10.3 million tweets during the first presidential debate between Mitt Romney and President Obama.
While the size of this audience on Twitter seems small when compared with its user base of 313 million monthly active users globally, that's not a good comparison, because even TV drew just ~66.5 million US viewers, in fact falling from 84 million during the first debate. What's more, the presidential debates were widely available on various platforms including Facebook and YouTube, and the fact that more viewers than before chose to watch the debate on Twitter is a big positive for the microblogging site. More so because ~70% of those viewers were under the age of 35, an increasingly targeted cohort of users, popularly knows as the 'millennials '. What's of most significance is that all of this looks increasingly likely to impact Twitter's top line numbers, which definitely could use some help. Quoting from Twitter's press release:
"Ad inventory for all four debates has sold out, and Twitter's livestream of the presidential debates is over-delivering on advertiser expectations. Twitter's mid-roll ads in the pre and post-debate shows over-delivered on impression estimates by 377% with still one debate to go."
Reportedly, Twitter started autoplaying some live streams on desktop last week, and this could have contributed in part to the rise in viewership. But given that ~82% of Twitter users are mobile users, the impact is unlikely to have been very large.
But, What After The Presidential Debates?
So, the next logical question is, what happens once the impact of the debates blows over? That's where it becomes imperative to look at Twitter's NFL live streaming stats. Twitter has now seen viewership for this event grow for the third week on the trot. After recording a viewership of 2.1 million during the first game it live streamed, Twitter attracted 2.3 million viewers during the second game, and 3.2 million viewers during the third. That's a very encouraging trend for Twitter, given the number of sports-related streaming events it has lined up, including the NBA, the NHL and MLB, among many others.
If Twitter can effectively leverage the cord-cutting phenomenon and become a one-stop shop (screen) for prominent live events, a turnaround will be well underway. For now, it seems to have begun. But let's be clear, none of this necessarily means more users. Will live streaming bring in new users? Maybe, maybe not. What it will do though, is lift engagement on the platform, which could bring back the advertisers and ad Dollars that seem to have eluded the platform of late. At the very least, Twitter is likely to be in a better position to engage and monetize its existing user base.
Earlier this month, Twitter just signed its largest video advertising deal (on its Amplify program) with the CW and Ford, wherein Ford will run pre-roll ads on content created by CW through the coming year. And Twitter will then use its data to promote these ads (and video content) in front of targeted Twitter users. Coming at this time, the deal is encouraging, and all put together, Twitter's video advertising business seems to be gradually snowballing into something of significance. The transition will take time, but it seems to have begun, at the very least.
Wait For The Buyout Frenzy To Settle Down
All of this said, it's not the best time to be buying Twitter shares right now. Twitter's stock price is still at elevated levels, and it's likely to stay that way, because the wolf-wolf-esque speculation just refuses to go away. And media houses won't let go of an opportunity to milk the buyout frenzy, even if it means coming up with rather misleadingly authoritative titles like "Facebook will buy Twitter". There's also speculation that Salesforce (NYSE:CRM) is still interested in buying Twitter, even though that sort of a deal doesn't make sense financially. And then there's an Australian hedge fund manager who's convinced that Twitter will be bought out by a private-equity player, who will then fire CEO Jack Dorsey.
Twitter could still get bought out, but if the losses suffered by investors in the last week are anything to go by, crystal ball gazing could come at a very heavy price. If a buyout happens, the rewards could be significant. If it doesn't, it's very likely that Twitter's stock price could fall further. Conservative investors would do well to wait till the frenzy subsides and Twitter's stock price catches up with rationale. For now, Twitter is an exciting company to watch, not own.
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