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Does Twitter Have the War Chest to Defend Its Turf?

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Jan. 17 2019, Updated 5:40 p.m. ET

Tightening race for advertising dollars

Twitter (TWTR) is in an industry that continues to see tightening competition. In addition to the company’s traditional rivals Facebook (FB) and Google (GOOGL), e-commerce and music streaming providers such as Amazon (AMZN) and Spotify (SPOT) have also heightened their pursuits of digital advertising dollars, creating more competition.

Also in the race for digital advertising dollars are mobile operators AT&T (T) and Verizon (VZ). Last year, AT&T unveiled a new advertising unit called Xandr. On its part, Verizon runs a digital media and branding division called Verizon Media Group, which was previously called Oath.

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Twitter captured 1.0% of the US digital ad market

Facebook and Google captured 20.6% and 37.1% of all digital ad spending in the United States in 2018 compared to 1.0% for Twitter, according to eMarketer estimates. Amazon is estimated to have captured 4.2% of the market. Spotify is still a small player in the digital advertising space, but it poses a growing threat. In a bid to capture more advertising dollars, Spotify will start offering ads in its weekly personalized song playlist product, Discover Weekly, TechCrunch has reported.

Twitter is sitting on a $6.0 billion cash stockpile

Does Twitter have the war chest to grow or at least defend its turf in the increasingly competitive digital advertising industry? The company closed the third quarter of 2018 with $6.0 billion in cash, an increase from $5.7 billion in the previous quarter. The company’s cash stockpile has been swelling in every quarter since it started making profits late last year.

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