On February 25th, Twitter (NASDAQ: TWTR) will host a virtual analyst day. Twitter has struggled mightily to articulate a vision, to prove it can execute strategy and to show investors that past underperformance is over. The company has a chance to express a bold strategic vision that takes a skeptical investor community by storm. In other words, the company has a chance to do what Disney pulled off when it finally went all in with Disney+.
Not too long ago Disney (NYSE: DIS) was struggling to win over investors who were skeptical the media behemoth could navigate the changing tides of the media landscape. Many were very critical of the company’s competitive position towards Netflix (NASDAQ: NFLX). It all changed when Disney clearly and concisely articulated a bold strategic direction to pour all of its resources towards Disney+. COVID aside, the more forcefully Disney embraced the future and showed off its commitment, the more the investors responded. And now, Disney trades at or near all time highs despite massive near-term losses from Disney+ investments and a near total shutdown of its cash cow theme parks due to COVID.
Twitter has a chance to unveil a big picture view of the many changes that have been happening or are in the works. The changes include a brand-new advertising technology, innovation in audio, the potential of Twitter Spaces and its latest acquisition of a newsletter business Revue. Twitter has the chance to help creators monetize their content on an epic scale. It is the best curation tool for the Internet by far. Connecting creators of content with an audience should be the main revenue driver.
Revue is actually really interesting and the only reason that my newsletter is on Substack is that it couldn’t exist on Twitter because no such service was offered. I plan to actively research Revue to see if it makes sense to move over. See the actual announcement of the acquisition of Revue:
https://blog.twitter.com/en_us/topics/company/2021/making-twitter-a-better-home-for-writers.html
“Revue will accelerate our work to help people stay informed about their interests while giving all types of writers a way to monetize their audience – whether it’s through the one they built at a publication, their website, on Twitter, or elsewhere.”
Last May, I wrote a report on the potential of Twitter in a report called Twitter is a Value Stock.
Last July, I wrote an article about the potential for a change in investor perception (The Great FOMO Trade of 2020) Very few analysts and investors believe that Twitter can execute or even share a big picture strategic vision for how the company will grow and thrive. Expectations are low despite clear evidence for a quickening pace of innovation, execution (see ad tech improvements), and movement on subscriptions.
What is fascinating is that Twitter product execs are openly acknowledging their past problems and engaging with critics. Here is Twitter’s Head of Product:
One last thing, Elliott & Associates who joined the board last year has a standstill agreement that ends on January 30th. The advance notice period for Twitter’s proxy starts on January 30th, the very same day. If a shareholder like Elliott or even some other investor wanted to run a proxy fight, they have until March 1st for that to happen.
So, Twitter management has a very big reason to make sure they knock it out of the park on their analyst day. Investors may be focused on earnings on February 9th, but to me the real day to watch is February 25th.
With the right pitch, Twitter management has an opportunity to sprinkle some Disney magic on their stock. Dear Twitter management, do not throw away your shot.