Can Jack Dorsey And Project Lightning Save Twitter?

45.08
Trefis
TWTR: Twitter logo
TWTR
Twitter

While Jack Dorsey’s appointment to the role of permanent CEO at Twitter (NYSE:TWTR) has hardly surprised anyone, it remains to be seen whether he will be able to reinvigorate user growth on the micro-blogging platform. It is noteworthy that product changes have recently accelerated under his formerly interim leadership. Twitter has introduced a host of changes in its recent past, which could both raise the monetization from existing users as well as attract newer users to the platform. The tighter integration of e-commerce on Twitter with buy-buttons, in addition, boosts monetization opportunities as well. At the same time, the latest launch of Moments (formerly code-named Project Lightning) is an encouraging step taken to enhance the value proposition of Twitter among newer users. In the event this feature finds resonance among those users who signed up on the platform but did not convert into active users, Twitter’s stock could see upside in the future, we believe.

See our complete analysis for Twitter

Relevant Articles
  1. Twitter Stock Gained 9% In One Week, Where Is It Headed?
  2. Twitter Stock Posted Weak Results In Q2, What To Expect Next?
  3. Company Of The Day: Twitter
  4. Company Of The Day: Twitter
  5. Is Twitter’s Stock Undervalued At The Current Price?
  6. What’s Next For Twitter’s Stock?

Can Jack Dorsey Be The Saviour For Twitter?

While Jack Dorsey’s appointment to the role of CEO has been made permanent by the Board, questions remain on whether he can truly lead the company out of its myriad challenges. The Board has selected him based on his performance over the past three months and his deep knowledge of the Twitter product. However, his other role as the CEO of Square (a mobile payments start-up), which is expected to IPO in the coming future, raises valid concerns regarding the time he will be able to devote for Twitter. While various key investors such as Chris Sacca support his role at the helm, other investors also remain anxious about this move. Nonetheless, the stock price of Twitter has risen by 5% post this announcement, as it effectively ends the uncertainty surrounding the top leadership at the company. In other changes, Adam Bain has been appointed to the role of Chief Operating Officer, and former CEO Dick Costolo has exited the Board.

Product Changes Have Accelerated Under His Leadership

Recently, product changes have accelerated under the leadership of Jack Dorsey.   We believe this is a key positive for the company, as it is battling immense competition from rivals such as Facebook and Snapchat. Direct messages underwent various changes over the past few months, such as the removal of 140-character limit and the addition of bigger-sized custom emoji to make them more engaging and fun for users. Moreover, the company recently expanded the buy button on tweets to more closely integrate e-commerce on its platform. Lately, it also made possible for users to make political donations through tweets.

Yesterday, Twitter undertook the biggest product change in its history, with the launch of Moments (widely touted as Project Lightning). The Moments feature provides the best of what’s happening on Twitter in real-time (around events, TV shows, and news), with a click of a button. It is edited by human curators and allows users to follow events without the need to follow individual accounts. We believe this recent product change is exciting, since it adds to the value proposition of Twitter. The micro-blogging platform’s main competitive advantage lies in being a real-time network and we think this innovative new tool will help bring out that value to new users more effectively. The company is also expected to complement these product changes with a big marketing campaign at the end of this year.

Impact On User Growth And Engagement Will Be Key For Stock Price

The main problem for Twitter recently has been its inability to grow its monthly active user audience. During the second quarter of this year, Twitter’s MAU (excluding SMS fast followers) rose by only 2 million to 304 million. In contrast, other social networks such as Facebook and Instagram continue to see strong growth in active monthly audience. The key to solving this problem at Twitter lies in making the platform more attractive and easier for newer users. While hundreds of millions of more users had signed up on the platform, they did not convert into active users on the platform. Hence, innovations such as Moments will be essential for bringing value to this audience. We think Twitter must continue to roll out product changes more aggressively in the near-future to enhance its popularity among users. We will continue to track the success of Project Lightning, as we believe it will be essential for Twitter’s success in the coming future.

Our $38 price estimate for Twitter’s stock is over 30% ahead of the current market price.

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap

More Trefis Research