Acquisitions Could Boost TWTR Stock
Although Twitter, Inc. (NYSE:TWTR) traversed a rough road in recent years, the company may be able to revive TWTR stock in 2016. Jack Dorsey’s return to Twitter’s helm has refocused the firm, with special attention on its acquisition strategy.
Some would argue that Twitter can’t afford any more acquisitions, nor can it afford to lag behind competitors. The solution, according to the skeptics, is to bolster Twitter’s subscriber growth.
Okay, no one would argue that point, but the question is not whether Twitter needs to invigorate its user growth; it’s how. This isn’t the manufacturing sector where a firm can reduce supply in the face of lowered demand, thus returning them to a cash-positive position.
Twitter is a tech firm. Technology companies are measured by a different stick altogether. Their success depends on quality services that integrate in a unique enough way to keep customers loyal. Only then can tech stocks start monetizing users and their loyalty.
Twitter Gets Its First Piece of Hardware
Till now, the firm’s acquisitions haven’t really made sense, or to put it more clearly, they’ve been incomplete. Jack Dorsey is plugging Twitter’s holes with these new purchases.
When you consider the way rivals like Facebook, Inc. and Alphabet Inc layer their products, it’s clear that Twitter is far behind.
Consider the example of “Facebook Instant Articles.” The company created a way to open articles within the Facebook app, cutting load times by a factor of 10. However, they needed publishers on board.
The key was getting BuzzFeed involved. Once Facebook had a major player in the program, then it became a case of letting customers choose their preference. Wait times irritate users, so they obviously gravitated towards articles that loaded quickly.
As more publishers migrated to Facebook’s publishing platform, the company began charging a fee for content creators to access their own following. In other words, they built a market before profiting from it. That’s what Twitter needs to do.
Luckily, Twitter’s latest acquisitions show an evolution in the firm’s thinking. Take its investment in Muzik, a maker of high-end headphones. Twitter has poured money into this company, which could look like a waste of cash until you find out what separates Muzik from the competition. (Source: “Twitter Invests in Muzik, a High-End Headphone Startup,” Re/Code, January 4, 2016.)
The headphones have buttons on the outside that let users share music clips to social media. You can literally click and share. These kinds of interactive elements are what capture the imagination of consumers.
However, music streaming services like Spotify and “Apple Music” already have clip-and-share functions. Will this impair Twitter’s progress?
Untold Possibilities for TWTR Stock
I would argue it does not, mainly because those are still digital features. Giving that feature a physical process, like pressing buttons on your headphones, could increase its appeal to customers. We are, by nature, drawn to physical things.
Moreover, Twitter opens up its options just by adding the headphones. It could buy or partner with a streaming service to complement the Muzik acquisition or it could finally elevate its video service, “Periscope,” to a noteworthy platform.
In either case, Twitter has clearly noticed that music is the most popular subject on its service. It should take advantage of that strength, build layers of products, and then monetize them. It may be the only way to save Twitter stock.