Twitter Surges On Gnip Buy, New Hire

Twitter Inc. (NYSE:TWTR) recently announced that it is acquiring Gnip, one of its four long-time data partners. Investors’ sentiments were positively impacted by the news as the share price surged 11.4% ($4.65) to close at $45.52 on Apr 15, 2014.

The acquisition of Gnip is expected to boost Twitter’s ability to better monetize its tweets. Gnip has direct access to Twitter’s historical tweet stream, which it used to resell to customers. Per Twitter, the tweet data has strong value in the market as it helps to “spot trends, analyze sentiments, find breaking news, connect with customers and much more”.  

These were the primary reasons behind Apple’s (NASDAQ:AAPL) acquisition of Topsy Labs in late 2013, another data partner of Twitter. DataSift and Japan-based NTT Data remain the other two independent data partners of Twitter.

Gnip also analyzes data from other social media companies including Yahoo!’s (NASDAQ:YHOO) Tumblr, Foursquare and Disqus. Per The Wall Street Journal, it also collects publicly available data from Facebook (NASDAQ:FB). However, it is not clear whether these relationships will continue to last post the acquisition.

Twitter plans to offer 15 new types of advertising products over the next six months. The acquisition of Gnip’s technology will help Twitter to attract marketers, which will drive revenues. Moreover, Twitter will be able to directly sell the tweet data to the existing Gnip customers that will further boost its top-line growth, going forward.

Per The Wall Street Journal, Twitter also hired former Google Map director Daniel Graf as the new product chief. The new hiring is significant as Twitter aims at making the service user friendly in order to improve engagement.

Per eMarketer, Twitter’s maturing user base is a major concern for its growth abilities. In such a scenario, user engagement gains significant importance in order to limit churn rate to other social sites such as Facebook and LinkedIn.

Twitter’s recent new features that are similar to Facebook have failed to impress users. We believe the new product chief will primarily focus on making the site as distinctive from Facebook as possible while launching ad products. This will help Twitter to counter intensifying competition to attract advertising dollars, going forward.

Currently, Twitter has a Zacks Rank #2 (Buy).

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