This Could Leave Twitter Investors In The Cold

Detwiler Fenton analysts Alex Arnold tried to answer the question: Is Twitter Inc TWTR's window of opportunity closing?

As landscape changes, Twitter “may have to go on the defensive”

A close look into Twitter differentiators and a few of the gaps that have been closed over the past few months has led Detwiler Fenton analysts (along with many others) to have increasing doubts about the company's future prospects.

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"User growth has been the focus, but a deeper dive into the changing landscape reveals growing competition from hotter and more popular digital options," the report said. Below is a breakdown of Twitter differentiators and areas to watch in the months to come:

• Real-time advertising seems to be a field of increasing competition, far from maturity.
• Live-streaming service Periscope is also facing increasing competition, with Facebook Inc FB having entered the arena.
• Another area where competition is escalating quickly and "[t]he fight for scraps is intensifying" is that of video ad solutions, where other contenders like Facebook, YouTube, Instagram and Snapchat are bound to make Twitter struggle for attention.
• A "reduced reliance by the most influential people on Twitter as their platform of choice" has suggested a marked decline in future advertisers' confidence.

"These influencers are critical to TWTR maintaining its mindshare and differentiation in the market. If the platform loses its sizzle, it will also bleed advertiser interest," Arnold explained.

The Outlook

Detwiler Fenton's note that analysts are concerned that Twitter "fails to remain at the top of the heap in terms of being a platform where engagement is happening."

The analyst said have not seen "enough cool new stuff" introduced by company recently. Instead, they're seeing other well-financed competitors presenting new, more competitive features.

Moreover, Twitter's basis of differentiation, the real-time nature of its feed, is not being targeted by other competitors, which are managing to do so more directly and/or quickly.

"All is not lost for Twitter, but we're sensing more risk in the marketplace. As the landscape shifts, TWTR may have to go on the defensive," Arnold concluded.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.