Social media giant Twitter Inc (NYSE:TWTR) is creating restlessness among investors amid new developments announced last week. News surrounding the company’s direction in video advertisements and Project Lightning seem to be shedding light on Twitters long-term outlook. Additionally, Twitter is on the hunt for a new CEO as Dick Costolo will formally step down from the position on July 1st.
In order to attract advertisers, Twitter has announced that videos, Vines, and GIFs will play automatically on Twitter users’ timelines. For the first time, businesses will be able to put advertisements directly onto users’ timelines. According to Twitter, this is designed to make it easier for users to see content, as the current set-up to actively choose videos is time consuming. On June 16th, Twitter said in a tweet, “See more, tap less – videos now auto-play on Twitter! Your thumbs deserve a break.” On the same day Twitter also tweeted, “Introducing auto-play and new standard for viewability. Advertisers will only be charged when a video is 100% in-view.”
According to Axiom analyst Victor Anthony, Twitter users are two and half times more likely to view auto-play videos over other techniques. The analyst believes there is “no structural reason why Twitter should not benefit from auto-play video,” especially compared to Facebook. He continued, “Using essentially the same set of assumptions that we used for Facebook, we see Twitter generating an incremental $220 million in auto-play video ads in 2017.”Additionally, the completion rates were seven times greater on auto-play. Nielsen and Moat, two audience analytics metrics, will be partnering up with Twitter to provide third-party verification to validate such metrics.
Twitter also developed a new platform called Project Lightning in an effort to make it easier for users to follow important events. Essentially it is the evolution of Twitter’s hashtag system.
As part of the platform, Twitter will be adding a new button to its mobile app that will allow users to access a new world of content. Users will be able to follow a list of events, such as the Oscars or NBA finals. Even non-users will be able to see the best the platform has to offer in hopes that it will expand Twitter’s user base. Twitter plans to launch Project Lightening by the end of this year.
Victor Anthony weighed in on this project and said, “this should go a long way to attract more novice users to the platform, particularly those who currently find it difficult to find breaking news and other live content on Twitter.”
Aside from Twitter’s new platforms, the hunt for its next chief executive is in full swing. On June 22nd, The board of directors announced that the executive firm Spencer Stuart will help recruit potential candidates to succeed Dick Costolo. The company has every intention to consider internal and external candidates, but only those who are willing to take on the job full-time. This rules out Jack Dorsey, who is acting as the interim chief executive while also running his payments start-up, “Square”. He has told the media that he intends to remain at Square.
Victor Anthony believes that “Twitter should seek a new leader from outside the firm”. He sees this change as risky and that Twitter should act fast.
Victor Anthony currently maintains a Hold rating on Twitter with a $40 price target. The analyst currently has a 70% success rate recommending stocks and a +16.8% average return per recommendation.
Nomura Analyst Anthony Diclemente also weighed in on Twitter’s search for a new CEO, noting “the company could appoint a product-focused CEO, even from a larger internet company, including Google Inc. or Facebook Inc.” He also noted that Anthony Noto, the current Twitter CFO, should not be ruled out.
Anthony Diclemente currently maintains a Hold rating on Twitter with a price target of $39. Overall, he has a 65% successrate recommending stocks and a +8.8% average return per recommendation.
Out of 30 analysts polled by TipRanks, 11 analysts are bullish on Twitter and 19 analysts are neutral. The 12-month average price target for Twitter is $46.04, marking over a 29% potential upside from where the stock is currently trading. On average, the all-analyst consensus for Twitter is Hold.