Here’s Why Twitter Sold Its Developer Platform – Fabric
Recently, Twitter (NYSE:TWTR) announced that it had sold its Fabric platform to Google for an undisclosed sum. Twitter offered a suite of mobile developer offerings through Fabric, but as the company now focuses on its core product for long term growth, it is looking to sell its none-core assets and build a leaner structure. Twitter is struggling to grow users and increase user engagement. A renewed focus on its core business this year (after several talks of a possible takeover last year) is critical for the company’s revival. Recently, the company allowed live streaming directly through its app by incorporating Periscope into the Twitter app. This was followed by replacing the Vine app with a pared-down version which will let users capture six second videos which can be shared directly on Twitter. We believe Twitter is looking to strengthen its core business and provide all features with its own app to attract users. While the company continues to remain committed to developers and has stated that it will continue to invest in its public APIs and publisher platform, focus on its core business is essential for long term growth of the company.
See our complete analysis for Twitter
Leaner Structure, Focus On Core Business
Last year, Twitter saw plenty of interest from various players for a possible takeover. While no transaction eventually happened, Twitter now appears to be selling its non-core assets to build a leaner structure. This will ensure that the company can focus its resources on making its core product more exciting to attract users and increase user engagement. Our price estimate for Twitter is nearly 30% higher than its current market price and we expect its U.S. average monthly active users to increase from around 69 million in 2017 to nearly 83 million by the end of our forecast period.
If this growth is not achieved and the monthly active users stagnate at around 67 million (2016 number), there can be a nearly 10% downside to our price estimate.
We expect Twitter’s international monthly active users to increase from 264 million in 2017 to nearly 334 million by the end of our forecast period.
There can be a 5% downside to our price estimate if this number stagnates at around 260 million over our forecast period.
Twitter is facing a challenging environment and innovative changes to its core product are critical to draw and retain users. We believe the strategy to move towards a leaner structure by selling non-core assets and focusing on developing the key product can help the company drive revenues in the long term.
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