Twitter Innovations Fail To Address Platform's Achilles Heel

Twitter Inc (NYSE: TWTR) saw a sharp rebound of over 20 percent following the announcement of Microsoft Corporation (NASDAQ: MSFT) buying LinkedIn Corp (NYSE: LNKD).

MKM Partners’ Rob Sanderson maintains a Neutral rating on the company, with a price target of $14.

Sanderson believes Twitter’s shares will remain volatile through 2016, with sentiment on the stock continuing to be weak.

Impact Of Product Enhancements

The company has announced several product enhancements and has been building excitement for its NFL deal this fall.

“We continue to think TWTR has tremendous upside potential if it can cross-over to mass market utility, but are concerned by user growth and engagement,” Sanderson mentioned.

Related Link: NFL Owner: Streaming Will Outbid TV One Day

The analyst believes a majority of the products launched in June are relevant to Twitter’s existing users and might help drive engagement among heavy users.

However, the primary issue with user experience for the company has been that the platform is too difficult for casual members.

“A cleaner Android interface launched in early June is an improvement for new users. The other recent features do not seem to make the service easier to use, not really addressing this critical issue in our view,” Sanderson stated.

The NFL Deal

For now, live streaming video is a major focus for management, with the belief that the association with the NFL would draw in new users and showcase Twitter’s revamped value proposition.

“The NFL says they did not take the highest bidder, but felt the Twitter’s live conversation and syndicated Tweets was worth experimentation. A successful partnership this season could lead to follow-on opportunities with the NFL and other content owners,” according to the MKM Partners report.