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Twitter Expands Into Podcast Industry, SNAP & FB on Alert

Zacks

Twitter TWTR is striving to expand its appeal to a wide range of broadcasters and publishers as real-time media.

The company’s recently announced “audio-only broadcast” option is a step toward that direction. Reportedly, the feature is available for all Apple AAPL iOS users of the main app and Periscope, Twitter’s live-streaming app.

With the addition of this feature, Twitter attempts to expand its foothold into live podcasting and other audio-first content and thereby take on other players in the social media space.

We note that Twitter has been the best performing social media stock so far this year, returning 27.7%. In comparison, Facebook FB) and Snapchat parent Snap SNAP shares have lost 6.9% and 33.3%, respectively.


We therefore believe that both Snap and Facebook should take note of Twitter’s growing initiatives as the struggle for supremacy in the social media market heats up.

Year-to-Date Price Performance

Why Podcast?

Twitter is leaving no stone unturned to tap the growing trends in the market by adding newer and innovative tools to attract users to its platform and maintain its market position.

Twitter had earlier doubled its character limit from 140 to 280 in order to make tweeting easier and more expressive. The launch of Live Audio will help publishers and broadcasters to go live and reach an audience with audio only. With the latest addition, the character limit is no longer a concern. Users will be able to share updates, which exceed the character limit.

Moreover, Live Audio provides a low-bandwidth real-time broadcasting option to publishers in areas where Internet connection is slow. Twitter, which expects the growth rate of international ad revenues to continue to outpace U.S. ad revenues in the near term, will benefit from this addition.

Notably, Twitter is looking to expand into the podcast industry, given the high growth opportunities it offers. According to a study, only 22% of the U.S. adult population was aware of “podcast” in 2006, which rose to 60% by 2017. This reflects the growing popularity of podcasting in the United States.

Per Statista estimates from 2016, podcast advertising spending is expected to grow to $395 million by 2020 from $90 million in 2014.

Steps to Grab Market Share

The new Live Audio service reflects Twitter’s focus on expanding its real-time content offering as competition intensifies from the likes of Facebook, Snapchat and Facebook-owned Instagram. Twitter’s ability to attract advertising revenues amid significant competition from these companies will be a key factor determining its growth.

Facebook unveiled Live Audio way back in 2016 and launched it finally in May 2017 after testing Live Audio with several partners including BBC World Service (news radio), LBC (Leading Britain’s Conversation talk radio) and Harper Collins.

The company has been taking proactive measures to expand its live initiatives to cater to a larger audience. However, Facebook has recently come under tremendous pressure following the data misuse scandal and the alleged rise of fake news on the platform.

The social media giant recorded lowest sequential growth in user base since early 2011 in the last reported quarter. What’s worse is the company’s reduction in guidance for ad revenues. For the second half of 2018, the company projects revenue growth rates to decline.

Snapchat, which banks on video initiatives to garner support from younger generation, launched an audio-triggered lens in May this year. The platform added an audio element to boost the interest level of users, which has been falling lately. This is evident from the company’s last reported daily active users’ figure, which declined 1.5% sequentially to 188 million, the first decline since the launch of the app in 2011.

However, although Twitter witnessed a sequential fall in user base, many people still depend on Twitter for the way news is distributed on the platform. Twitter’s growing initiatives are expected to boost its presence in the social media market and attract more advertisers to the platform.

While Twitter and Snap carry a Zacks Rank #3 (Hold), Facebook has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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