For all its membership growth worries, Twitter (NYSE:TWTR) has pleasantly surprised analysts keeping an eye on the 140 character microblogging service. Originally feared to be a popular money loser, it turned out Twitter was the opposite: it can generate healthy revenues despite less than stellar user base growth. Well, if you think that Twitter’s revenue potential is limited to simply selling space on its newsfeed (aka borrowing Facebook’s revenue strategy), it turns out its video advertising potential is huge.
Considering the fact that most Internet users will be interacting with the Web on a mobile wireless touchpad device like a smart phone or a tablet in the future, Twitter’s moves to maximize its video revenue potential is nothing short of prescient. In fact, its January purchase of the video sharing app company Periscope positions Twitter well to reap revenues from the fast growing online video market. Paired with the fact that these videos will be viewed through mobile devices, it looks like Twitter has all the right pieces in place to snag a healthy chunk of the anticipated $17 Billion annual video advertising market. Given these developments, it is not surprising that analysts at Jeffries have upgraded their rating of Twitter stock to Buy. Expect more analyst teams to get on the bandwagon.
Of course, investing in Twitter, which has yet to report a profit, is not without risks. It is a very risky stock to invest in to say the least. Still, if the current market’s volatility remains the same, this stock would be a solid speculative mid-term acquisition.