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Pressure On Jack Dorsey Could Be Positive For Twitter Shareholders

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Pressure On Jack Dorsey Could Be Positive For Twitter Shareholders
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“We expect Twitter Inc (NYSE: TWTR) to be challenged to reverse its difficult competitive position against online video leaders as they all compete more aggressively for content and ad deals,” Loop Capital’s Blake Harper said in a note, while maintaining a Sell rating on the company, with a price target of $10.

Investing In Original Content

The analyst mentioned that Twitter was investing more in original content, as well as live programming, to attract advertising deals, although its broadcasts are likely to continue to have “smaller, niche appeal.”

“We believe it is the right strategy to invest in video and market it better to both advertisers and consumers, although we don't see it changing our estimates for revenue declines of 16 percent YoY in Q1 and 11 percent YoY in Q2,” Harper stated.

“The company claims that in Q4 more than 600 hours of live video were streamed across 400 events, attracting 31 million unique viewers. This translates to an average of 77,500 viewers per event,” Harper reported, while adding, “We believe Twitter has to leverage the unique real-time conversation around its video content to successfully attract larger audiences without paying too much to license or create its content.”

Pressure On CEO

On the other hand, the analyst noted that the recent “embarrassing headlines” could increase pressure on CEO, Jack Dorsey, which could prove to be a positive catalyst, given the potential for a full-time CEO who might be able to accelerate product innovation.

“Last week many high profile accounts were hacked and tweeted out anti-Semitic and political messages, which is another blow to Twitter's user growth efforts,” Harper elaborated.

Moreover, an academic report estimated that 9-15 percent of Twitter’s MAUs (monthly active users) were bots, which is higher than the company’s own estimate of 8.5 percent being bots.

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Image Credit: By (CC) Brian Solis, www.briansolis.com / bub.blicio.us, CC BY 2.0, via Wikimedia Commons

Latest Ratings for TWTR

DateFirmActionFromTo
Mar 2017BarclaysInitiates Coverage OnUnderweight
Feb 2017CitigroupDowngradesNeutralSell
Feb 2017Loop CapitalDowngradesHoldSell

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