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3 Things to Know This Week before Buying Twitter Stock

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Twitter (NYSE:TWTR) is only beginning to recover from the sell-off that hit global stocks last week and slashed its year-to-date gains. Twitter stock fell more than 13% in the past week. Fears about the coronavirus outbreak weighed on investors’ sentiment.

Here are three things every investor eyeing Twitter stock should know this week.

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Twitter stock jumps, company joins the stories bandwagon

Twitter is testing a disappearing posts feature known as “Fleets,” which is basically its version of the popular stories feature that first appeared on Snapchat in 2013. Seeing the success of Snapchat stories, platforms like Instagram, YouTube, and LinkedIn have developed their own stories features. Twitter will join them with Fleets, which is being tested in Brazil.

In addition to helping Twitter catch the competition, the Fleets feature could help the platform accommodate a broader base of users. For example, some people aren’t comfortable publishing regular tweets that seem permanent. Therefore, Fleets will accommodate people who just want to share passing thoughts. The feature could help Twitter grow its audience base and attract more advertisers to its platform.

Twitter finished the fourth quarter with 152 million daily users. In comparison, Snapchat has 218 million daily users. Facebook (NASDAQ:FB) has 2.3 billion daily users across its family of social apps, which includes Instagram. Facebook’s massive audience has given it an advantage in the competition for ad dollars. The company made $70 billion in ad sales in 2019 compared to Twitter’s $3.0 billion.

Twitter stock rose more than 3% on Wednesday after the company announced the Fleets feature test.

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Elliott Management wants changes

Hedge fund Elliott Management has taken a stake of about $1.0 billion in Twitter stock to push for changes in the company. The hedge fund wants to replace Twitter CEO Jack Dorsey. Currently, Dorsey splits his time between running Twitter and Square (NASDAQ:SQ)—a financial services company.

Coronavirus disrupts Twitter’s normal operations

Twitter has canceled events, stopped most travel, and asked staff to work from home as a measure to curb the spread of the deadly coronavirus. Facebook, Amazon (NASDAQ:AMZN), and Google (NASDAQ:GOOGL) employees have already caught the virus. The virus outbreak could weigh on advertising. Notably, business activities have slowed down. Twitter derives most of its revenue from advertising sales.

The coronavirus situation has weighed on Twitter stock. However, the company should be able to rebound after the virus is contained and investors start to assess stocks on merit.

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