Twitter's Live Streaming Efforts May Be Its Last Hope For Growth

Twitter Inc (NYSE: TWTR) shares have declined 20 percent year-to-date, but have rallied 30 percent from their lows and the stock valuation is currently in line with that of its peers.

Loop Capital’s Blake Harper initiated coverage of the company with a Hold rating and $18 price target.

Last Hope For Growth

“We believe the valuation reflects optimism around the potential to monetize a larger audience through live streaming deals and some takeover premium, which we view as unlikely in the near term,” Harper mentioned.

The analyst believes Twitter is struggling to achieve its potential to become a “utilitarian” news source and a more compelling complement to other forms of media, including television.

Related Link: Twitter's Dramatic Ad Revenue Deceleration Leads To RBC Downgrade

However, Harper expects the company to face near-term user growth headwinds, while viewing its live streaming initiative “as its best chance to revive growth and monetize a larger audience.”

The analyst noted the company had signed several deals for the live streaming of political and sports content via is primary app, although these rights mostly are non-exclusive.

Slow Innovations

On the other hand, Harper pointed out that product innovations have been “painfully slow,” while stating that Twitter was “aware of its many product deficiencies and has made modest steps to address them over the past couple years but turnover in its executive, product and engineering ranks has limited progress.”

The analyst believes that apart from live streaming, the biggest opportunity for user and earnings growth would be driven by an acceleration in new product introductions, as well as expanding the reach of Twitter’s platform and communicating a viable long term strategy.

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