Note that while user growth has all but stopped, the monetization of its user base is exploding. In fact let’s plot revenue growth in the last year on the y-axis and rank Twitter, Facebook and LinkedIn on the x-axis.
Even with stagnated user growth, in the context of its two closest competitors, revenue growth is booming. So what does this new strategy potentially add to Twitter? A lot.
Now what?
On Twitter’s last earnings call, COO and head of revenue, Adam Bain, said that the company believes these ads will monetize at about half the rate of usual Twitter ads (Source: re/code).
Doing some quick math, that 500 million more logged out users would mean an additional $1.5 billion in revenue. Yes, that’s 75% more revenue essentially turned on like a light switch.
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Huge News #3
As of early January, Periscope now streams inside the Twitter stream, as opposed to a link. Periscope already boasts 10 million active users and hosted more than 100 million active broadcasts. Video streaming and video ads are the fastest growing segment in advertising.
Online video advertising spending in the United States will hit $9.1 billion in 2016, up from $4.4 billion just two years ago. This is the battlefield and could breathe yet another massive revenue flow into Twitter.
Twitter: A Value Play?
If we compare Twitter to Facebook and LinkedIn in terms of price to sales, we’ll find something else stunning.
Even though Twitter is growing revenue faster than its social media peers, it has the lowest valuation as measured by price to sales. And again, none of these charts have been impacted by this potentially massive new revenue source just announced at the end of December.
CONCLUSION
Twitter has the makings of a huge growth story. But with its stock hitting all-time lows last week before the Twitter takeover rumors swirled, there is still a mix of serious upside as well as serious risk.
Read more from Ophir on CMLviz.com.
Twitter: @OphirGottlieb
Author has a position in TWTR at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
