Here’s An Update On Twitter

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TWTR: Twitter logo
TWTR
Twitter

Twitter’s (NYSE:TWTR) board of directors recently provided an update to their CEO search process. Specifically, a search committee has been established, which has engaged Spencer Stuart (a global executive search firm) to help in the transition process. Both internal as well as external candidates will be considered for this role. Also, the board clarified that it is looking at only those candidates that will be able to make a full-time commitment to Twitter. This means that Jack Dorsey, who will take over as the interim CEO of Twitter effective July 1, 2015, will be considered for a permanent role only if he steps down from his other job as the CEO of Square (a mobile start-up company) . Coming on the heels of criticism by a key investor (Chris Sacca) that the CEO transition process has been “sloppy and confusing”, the board also reaffirmed that it is undertaking the search process with a sense of urgency. [1]

See our complete analysis for Twitter

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In another update, reports indicate that Twitter is working on a new feature called ‘Project Lightning’, through which it hopes to accelerate new user growth and address concerns pertaining to lack of aggression in pursuing product innovation. [2] The new feature will be based around live events, which will be curated by human editors, to present the best set of tweets, pictures and videos. A new button for viewing such live events will be added to the Twitter app.

The key issue that has plagued Twitter in the recent past includes slowing user growth, which has been attributed to difficulty in making the company’s value proposition clear to new users who sign up on the platform. Twitter’s competitive advantage lies in being a real-time network, and this feature will help present this value proposition in a user-friendly manner. Currently, the same live stream can be accessed through hash-tags, but the process is difficult for new users to follow. While users would not have to sign-up for viewing this feature, Twitter hopes that this innovation will eventually bring more users to the network.

We are encouraged by this shift in product strategy, since this will make Twitter feed accessible and useful for a much-larger audience. Coming at the same time that the board is searching for a new CEO, this move also signals that the company is ready to take on new aggressive measures to enhance its growth. We believe such bold measures would be necessary for the company to unlock its full potential in the coming future.

Our 48.37 price estimate for Twitter’s stock represents over-30% upside to the current market price.

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Notes:
  1. What Twitter Says, and What Investors Hear, Lower Case Capital, June 18, 2015 []
  2. This Is Twitter’s Top Secret Project Lightning, Buzz Feed, June 18, 2015 []