Twitter TWTR now seems to have different thoughts about the future of Vine, its short video sharing service. A few days back, the company had announced that it will be shutting down the app in the near term.
However, reportedly, the micro blogging site is now thinking of selling the app after getting plenty of bids in the past few days. Tech Crunch reported that the interest in Vine stemmed from the outpouring of grief by Vine users. The report, citing sources familiar with the matter, added that many of the bidders were from Asia. Though Tech Crunch refrained from naming the bidders it hinted that Japanese social media giant Line may be interested in acquiring Vine.
Analysts observe that Twitter will not make a windfall by selling Vine as the bids average below $10 million. Twitter acquired Vine in 2012 for about $30 million. Nonetheless, the continued existence of Vine could benefit Twitter. Since Vine videos are directly streamed on Twitter’s platform, it could be in line with its efforts to add more live video content on its platform.
Twitter is making all efforts to monetize the opportunity presented by live video viewing to fight sluggish user and ad revenue growth. Online video is the most lucrative component of digital advertising. Facebook, YouTube and others are trying to grab a pie of this lucrative market. Twitter is now exploring beyond news and the series of live streaming deals are a step in that direction. The company inked streaming deals with sports leagues like NFL, NBA & MLB. It has also brought on board media houses like Bloomberg and Cheddar. Through live streaming, especially sports, the company hopes to bring more users.
Twitter is also trimming costs. At its third quarter 2016 earnings, Twitter announced a cut in its workforce. The company is planning to reduce 9% of its workforce worldwide, resulting in over $10 to $20 million of cash expenditure (mostly severance packages) and another $5 to $10 million of non-cash expenditure. Twitter reportedly has over 3.8K employees.
Layoffs had long been anticipated as the company intends to chart a solo strategy to turn things around. It’s a no-brainer that cost cutting will be an integral part of the strategy.
At present, Twitter carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader tech space include Jabil Circuit Inc. JBL, Facebook Inc FB and Intel Corporation INTC, Jabil Circuit sports a Zacks Rank #1 (Strong Buy) while Facebook and Intel carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Jabil Circuit has delivered an average positive earnings surprise of 41.58% of the trailing four quarters while Facebook and Intel have delivered positive earnings surprises of 21.11% and 12.14%, respectively over the same time frame.
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