AOL (NYSE:AOL) recently announced the first redesign of its email platform in the last five years. The redesign is focused on making the interface simpler and more modern and is an effort by AOL to keep the users engaged to its struggling email service and prevent them from moving to Google‘s (NASDAQ:GOOG) Gmail or Yahoo!‘s (NASDAQ:YHOO) Yahoo! mail. We believe these redesigns could stimulate user engagement and consequently increase the number of page views per unique visitor across AOL properties.
We currently have a $28.69 price estimate for AOL, which is approximately 10% below the current market price.
A company’s mail platform is, in many ways, the primary avenue for user engagement. One of the first things that users do after opening a web browser is checking email. Additionally, when they log into an email provider, they are more likely to stay on its web property for further content consumption. We believe the changes to AOL’s email platform could stem the exodus of users to competing email services and increase the time spent by the users on AOL properties to view content. More page views would translate to more revenues for the company.
The primary focus of the redesign was to simplify the experience of using email, and we think AOL has succeeded on that front. Advertisements, which are a major annoyance to users, have been moved to the right hand side of the page from top previously to reduce overall clutter. We think these changes will be welcomed by its 24 million active users, who may now spend additional time on the email platform and, by extension, engage with AOL’s other products.
If the company is successful in growing its mail client again by stimulating more page views and attracting new users, we could see an upside to the Trefis price estimate. For example, if the number of page views per AOL unique visitor increases to 180 million by the end of our forecast period, the Trefis value for AOL could reach $30. You can assess the impact that changes in page views per unique AOL visitor have on its stock value by dragging the trend-line in the chart below.
Overall, we think the changes to AOL’s email platform are a step in the right direction. Five years is too long a time to wait to innovate on a product design, especially when Gmail and other competitors products are rolling out updates on a regular basis.