JEFFERIES: Twitter's 'Strong Brand' Isn't Enough
Almost everyone has head or used Twitter these days. This is especially true since the US president Donald Trump made Twitter his preferred social media platform. However, Twitter’s strong brand is not enough for one Wall Street bank.
Jefferies, in an update sent out to clients, downgraded the company’s stock from a “buy” to “neutral”. Additionally, the price target was reduced from $20 to $16.
According to analyst Brenth Thill who wrote in the said, Twitter has a robust global platform which a big and growing user engagement but the company is slipping in monetization of the platform. He added that in the social media industry, Facebook is taking the lion share of the revenue generated in the market. He added that there is a lot of debate among investors concerning Twitter’s ability turn around its -6% drop in revenue and gain additional share of the digital ad market.
Twitter has been recording an increase in it user base in the recent years. The company did add any new active user in the most recent quarter and only added 5% users above what it reported last year. However, the social media giant has been recording a slight increase in its engagement. Since the return of Jack Dorsey to the company’s management team in 2015, there has been some changes in the platform and a lot of focus placed on “live” which makes many of the platform users to log in almost every day.
Although the company has a strong brand, it has failed to attract advertisers. Figures of revenue generated from ads on the platform have not been unpleasant. At a time where there is a 15% growth in digital advertising, in this year’s first half, Twitter went down by 6. This is attributed to the fact that many advertisers are not getting what they expect from the platform.
In the last two years, the stock has shed $14 and investors are looking at the current management to improve on the falling average revenue in the near future. The company y intends to shift its attention to sentiments coming from advertisers