Twitter Inc. (TWTR) recently rolled out its much-hyped “While You Were away” feature, which bears a strong resemblance to Facebook’s (FB) Timeline.
The new feature displays the most popular Tweets at the top of a user’s feed so that they do not miss out on anything important while they are offline. This new feature is available on Apple’s (AAPL) iOS as of now. However, it will soon be launched for users worldwide. Twitter first announced the feature in Nov 2014.
While many users saw the feature pop up for the first time on their newsfeed on New Year's Eve, some users reportedly had access to the feature since the beginning of Dec 2014 itself.
We believe that this new feature will help Twitter in luring in more users, which, in turn, will drive growth and profitability of the company, going forward. Further, we believe that the new feature will succeed in converting many non-active users to active users of the micro-blogging site. However, we also believe that its success will to a large extent depend on the algorithm that the company uses in determining the top news feeds.
Of late, Twitter has been hampered by a persistent slowdown in its user growth rate. In the third quarter of 2014, its user growth rate was 4.8% compared with 6.3% in the prior quarter. Attracting more advertising revenues will be difficult if it cannot improve its user growth, especially considering the significant competition from Facebook, Yahoo! Inc. (YHOO) and market leader, Google (GOOGL).
We believe that the acquisitions of Cover, Gnip, TapCommerce, Namo Media and CardSpring will expand Twitter’s product portfolio and monetization capability. Furthermore, the company’s foray into e-commerce by testing the ‘Buy Now’ button is a significant positive, in our view.
Currently, Twitter has a Zacks Rank #3 (Hold).
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