Early on Monday morning Twitter TWTR announced it will begin to utilize a new feature. The Twitter “Buy” button will be released to a small percentage of US users and will enable the purchase of goods and services. Clicking the button will offer users the opportunity to view more product details and enter shipping & payment information.
Bank of America/Merril Lynch BAC analyst Justin Post believes this new feature may bring added revenue. He writes “ Although we do not know what the financial terms for Buy button sales on Twitter (typical eCommerce take rates can range from 5-15%), we believe successful direct response ads can have higher click-through rates and can yield well over $5.00 per 1,000 Timeline Views (above our estimate for 2014 US at $4.19)”. In light of Twitters low ad inventory, the acceptance of a “buy” button has potential to be widely accepted by US advertisers resulting in global adaption of the new button.
Bank of America reiterated its Buy rating oN Twitter with a price target of $60. Shares of Twitter are trading up 3.25 percent to $52.26 in mid-afternoon trading on Tuesday
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