Why Twitter Stock Skyrocketed Today

Twitter has a plan. Or rather, the smaller social network has several plans on how to address many of the perceived weaknesses in its business, and Twitter laid out those plans earlier today at its Analyst Day.

Shares have jumped 8% following the big reveal, a clear sign that investors are optimistic about the new initiatives.

Twitter's total audience is bigger than you think

Earlier this year, management pointed out that Twitter's total audience is much larger than its reported monthly active user, or MAU, numbers would suggest. Hundreds of millions of people go to the site each month to view public tweets, but without logging in. Twitter estimated that including these visitors, its total audience is actually 2 to 3 times that of its MAU base.

Investors now have more details on this large group of unregistered visitors, and how Twitter hopes to entice them into signing up. CEO Dick Costolo said there are 500 million of these logged out visitors, while also announcing a new "Instant Timeline" feature that's designed to cater to these visitors.

Instant Timeline will automatically populate a new user's feed based on selected interests and without having to follow people. Historically, new users would have to select people to follow, which can potentially be a time-consuming process. Twitter wants to reduce the onboarding friction.

If Twitter can successfully coax these users to sign up, it could potentially help its MAU figures in a big way, and investors have been fretting an awful lot about deceleration in MAU growth.

When algorithms attack

Twitter is also adding new features for existing users to grow engagement. The company is building out better video capabilities, and improving direct message functionality as well, such as the ability to privately share a tweet. Costolo says he thinks private messaging is a huge part of Twitter's future growth, but Twitter has a fairly weak position in messaging compared to Facebook and other tech players.

Another new feature is "While you were away," which will attempt to aggregate relevant tweets that you might have missed since the last time you visited the site. Costolo has discussed algorithmic Timelines recently, which is a departure from its typically unfiltered chronological approach and more along the lines of Facebook 's strategy. "While you were away" could be part of what Costolo was referencing.

When it comes to having a broad portfolio of brands and apps, Twitter is behind its larger blue rival. Facebook now has WhatsApp and Instagram, alongside a slew of stand-alone apps that have been unbundled. Twitter just has Vine. As usual, Twitter and Facebook are on the same path, and Twitter plans to release more mobile apps in the near future to address specific use cases.

Twitter has talked the talk, but can it walk the walk?

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Evan Niu, CFA owns shares of Facebook. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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