In one of the most controversial moves by a social media platform ever, Twitter Inc. (TWTR) decided to classify a Tweet from the American President as “glorification of violence” on May 29. As a retaliation for this action, President Trump signed an executive order targeting social media companies in abid to defend free speech on these platforms.
Many legal experts have warned that this order is on shaky legal ground and might fail to hold inside a courtroom and tech giants have already filed a lawsuit challenging this order. Twitter shares initially dropped 10% because of this uncertainty but recovered in the last week as investors shifted their focus from short-term troubles to long-term gains resulting from this development.
A Blessing In Disguise
The political unrest in America and the clash between the government has brought Twitter to the spotlight once again. According to data from Apptopia, the Twitter mobile application was downloaded 677,000 times on June 3, which is the highest-ever number reported by the company since it was founded in 2006. On the same day, Twitter hit a new record of daily active users in the U.S. with 40 million Americans using the platform.
For the best part of the last decade, other social media platforms such as Facebook Inc. (FB) and Snap Inc. (SNAP) have dominated the industry, leading to meager returns from Twitter. For instance, Facebook shares have gained a staggering 37% this year while Twitter stock is down 3% in the same period. The current situation, however, might turn the tables in favor of Twitter as the platform is once again rising in popularity which is evident from app download data.
A Turnaround Is On The Cards
Twitter has never been able to monetize its userbase as Facebook does. For instance, Twitter brings in $20 per user whereas Facebook earns $30 per user, and the latter has over a billion daily active users whereas Twitter still averages around 170 million users per day. This suggests that there’s leeway for growth if the company adopts the right strategy.
In a promising move, activist investors Elliott Management and Silver Lake Capital reached a deal with Twitter CEO Jack Dorsey to make radical changes that could lead to a 20% growth in daily users. Commenting on the recent changes to its business model, Twitter product lead Kayvon Beykpour told Barron’s, “We’ve really cranked up the engine. We’re taking bigger swings and moving way faster.”
With daily active users booming and the company focusing more on monetizing its users, Twitter could deliver attractive returns in the next 12 months on par with other social media giants.