) recently entered into a partnership that will allow the
former's users to shop directly from the latter's e-Commerce
portal. The service will be available to users who will connect
the two (Twitter and Amazon.com) accounts.
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By replying to the product links appearing with the hashtag
#AmazonCart, U.S. customers can add items to their Amazon
shopping cart. They can complete the transaction later on by
The service is expected to promote Twitter's viability as an
e-Commerce platform. Per Bloomberg, although Twitter will not
earn any revenues from the deal (as cut-off percentage from
individual sales), Amazon is planning to increase its ad
investment on the platform, which is a significant positive.
Twitter has been searching for ways to monetize its platform,
including direct shopping option on the portal. This business
model, already practised by the likes of
) Weibo and Alibaba in China, will help Twitter to better
monetize its 255 million strong user base.
We believe that the success of the new service will help Twitter
to attract advertisers and retailers in the near future.
Advertising revenues contribute more than 90.0% to Twitter's top
Twitter launched a number of new products for advertisers during
the recently concluded first quarter. The company allowed
marketers to create tailored audiences from email lists and
customer relationship databases. Twitter also enabled advertisers
to target TV conversations for Spanish-language television and
connect with users through Promoted Accounts in search.
As a result, advertising revenues surged 125.0% from the year-ago
quarter. Advertising revenue per thousand timeline views jumped
96.0% year over year to reach $1.44 in the reported quarter.
Mobile advertising revenues were more than 80.0% of total
advertising revenue in the quarter, up from 60.0% in the year-ago
As spending on online advertising is expected to increase
manifolds versus traditional media, we believe that Twitter has
massive growth opportunity, due to its strong mobile products.
Twitter's ability to attract more advertising revenues, despite
facing significant competition from
) and market leader
) will be something to watch out for in the near term. In this
regard, the partnership with Amazon will improve Twitter's
competitive position in the near term.
However, higher operating costs and continuing investments on
product development will hurt profitability.
Currently, Twitter has a Zacks Rank #3 (Hold).