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Since mid-March, Twitter shares (NYSE: TWTR) have been on the run. Shareholders expected the company to report faster user expansion and it looks like they’re getting what they asked for. However, if you look beyond the number of Twitter users, we locate disorders that don’t seem to have simple solutions. The company is expanding its users, but until it can turn them into successful relationships, long-term investors avoid Twitter’s actions.
Undoubtedly, the pandemic prompted two activities. First, other people are constantly looking for information, increasing the expansion of social media users. Secondly, the use of the video is greater as everyone tries to occupy their time at home. In the Twitter convention call at the time of the 2020 quarter, CFO Ned Segal said much of the expansion in the company’s number of users is due to “events around the world.”
Twitter and Snapchat (NYSE: SNAP) have noticed that their user expansion rates have increased recently. Twitter reported that users of daily active monetizers had accumulated by nearly 34% year-on-year, which is the fastest increase in recent quarters. Snapchat reported an annual accumulation in the number of daily active users (DAUs) of 17%. Some investors may assume that all users are looking for the same thing. However, there is a big difference between how Twitter and Snapchat users interact with those services.
Use
Snapchat
New
17%
56%
View photos
64%
42%
Watch videos
50%
32%
Share content
46%
32%
Networks
21%
26%
Share one by one
45%
20%
Shopping
5%
7%
Promoting my business
6%
7%
Although Twitter is considered a social networking site, depending on your activity, it is more of a news destination. One of the biggest differences between Twitter and other sites is the lack of average Twitter user interaction. According to the Pew Reseek Center, the average user tweets only about twice a month. while the 10% more sensible users tweet more than 130 times a month. This leads us to the first explanation of why the recovery of Twitter’s inventory market may end. Twitter users search for news, view photos and watch videos, but participation is limited.
Snapchat users seem much more comfortable to share content. This can also be a key difference in the sustainability of user expansion on each site in the future. Snapchat is increasingly likely to interact, while more and more Twitter users seem comfortable eating content passively. Once the pandemic has passed, Twitter users would likely locate their need for distraction and obtain less urgent data. In short, Snapchat turns out to be able to retain its new users, while Twitter may also be just another data source.
It is ironic that Twitter and Snapchat are experiencing such an expansion in use. Snapchat essentially invented the endangered post, and Twitter is the latest addition to the party. Snapchat says its default setting is to automatically delete “Snaps”. In addition, posts added to “My Story” disappear 24 hours after they are added.
Facebook (NASDAQ: FB) has started providing Stories in reaction to this option on Snapchat and Instagram. In late 2019, CFO Dave Wehner stated that “the decrease in average value consistent with corporate ads is basically because the existing combination replaces Stories ads, which are monetized at declining rates.” Earlier this year, the CFO argued that the average value consistent with the ad had declined in component due to advertising in the stories.
Twitter must provide its own Edition of Stories, which it will call Fleets. The concept is being tested internationally, however, CEO Jack Dorsey said, “We hope to implement it as temporarily as can be imagined around the world.” Fleets won’t be able to get likes, answers or retweets and will disappear at 24 hours. The theory is that Fleets will solve the challenge that other people don’t feel comfortable posting their own posts on the site. However, as we have noticed from the use, users would possibly not be comfortable; chances are many of them just don’t see Twitter as a position for percentage of their own information.
Fleets are the explanation for why the uptick in Twitter’s inventory market may also end. The company deploys a product that is monetized at a lower rate than other ads. In its most recent quarter, Twitter reported that its inconsistency with money had decreased by nearly 41% consistent with the year. The addition of fleets suggests that these struggles would possibly only worsen.
The third explanation of why the recovery of Twitter’s inventory market might be in trouble: control doesn’t seem to fully perceive how bad things are right now. A quick comparison of some of Twitter’s key figures and Snapchat’s recent recent top quarterly effects shows how those corporations behave year after year.
Campaign element
Snapchat
Income
17%
(18,7%)
Expenses and development
ten%
35,5%
Sales and costs
18,5%
(13,7%)
general and administrative expenses
6,4%
9,1%
Three-month operating money flow
30% *
(40,7%)
As profits and money flow decrease, peak companies would reduce their expenses to maintain their money flow. More users are expected to generate more profits for Twitter in the future. Unfortunately, the company has reported that lately it does not have the ability to serve its advertising consumers as well as you would like. While Snapchat reports hits where the site has generated higher sales for its consumers, Twitter continues to work with its offerings.
Management has made some comments about the latest Twitter convention that seem disturbing. CEO Dorsey said of the company’s small business capabilities: “Our self-service channel for small and medium-sized businesses is small right now.
Chief Financial Officer Segal said Twitter’s direct response advertising offers the measures advertisers expect: “Can we get where we want to be from the point of view of the measure? We think we can.”
Twitter generated more than 80% of its profits through advertising in the last quarter. The company has taken a step forward with its front product and users have flocked to the site in search of news. But while Twitter would possibly end up working despite its advertising challenges, this is a “strike while iron is hot” for the company. Although Twitter has more users, if you can’t figure out how to make it more effective with the situation, inventory recovery can also end. Twitter investors who have owned a corporation during the inventory increase in recent months could take their profits now.