Bob Peck: Twitter’s Secret Weapon

My pal Bob Peck has increasingly become one of the most well-regarded analysts in terms of what’s going on at Twitter. Bob has the stock rated at Buy. Full disclosure: I own some shares too, purchased on the IPO.

Anyway, Twitter’s been kind of a basket case for investors since it’s gone public, with lots of volatility, some great moments and plenty of disappointment. There are investors calling for the CEO’s head (which I think it ridiculous) and there many who’ve thrown in the towel on the company ever being able to grow its active user base. But Peck says they’re missing out on the one thing that could lead to a “Facebook Moment” – wherein growth explodes all at once just when everyone has given up on the platform.

Here’s a snippet from Bob Peck’s latest report at SunTrust:

…we think one of the lesser-known opportunities for Twitter MAU growth acceleration and monetization may lie in new app deals that leverage the “Logged in Automatic MAUs.”

2013 ESPN App Re-launch Provides Blueprint. Many investors are unaware that Twitter worked with ESPN in the summer of 2013 to build a deeper integration of Twitter into the release of the new ESPN Sports Center app released in November 2013. The launch caused a spike in ESPN’s app usage and looking back over the last 7 quarters, we can see that Twitter had a spike in Automatic MAUs in 4Q13 growing 8m sequentially, by far the highest we have ever seen.

Twitter Can Increase Automatic Reach ~3-4x with Similar Deals.

Josh here – my comment is that if these deals are in the works, investors would hope that they are with partners of equal size and stature vis a vis ESPN. How many potential partnerships are out there that could be? And when will these deals be struck / rolled out? Will The Street notice and see this coming?

Any meaningful acceleration in Twitter MAU growth would certainly be outside of consensus and a big upside surprise. But is this realistic? Guess we’ll see.

Source:

“Automatic MAUs” Could Help Drive Twitter’s “Facebook Moment” in 2015
SunTrust – January 5th 2014