does twitter deserve a spot in your portfolio let's run through the bull and bear case in
about five minutes my name is brian Feroldi and my name is Brian Stoffel.
Brian we recently did an hour-long deep dive on twitter let's go over what they do for those that
don't know twitter what do they do who are these people well if you don't know twitter a lot of
people think that it's a social media company but you and i both believe what it really is is
a micro blogging community where people can reach out and make connections in 280 characters or less
twitter as a massive audience globally over 206 million average monetizable daily active users
that's a key metric that this company continues to report and track and it shows how many users are
engaging with twitter on a daily basis so how does a company make money it gets its revenue
in two main forms the first like many social media companies is via advertising but it also
has a data licensing and other revenue section that is growing quite quickly as well speaking
of other revenue twitter has made a number of moves in the last couple of months that allow
itself to engage and monetize its audience in new in ways for example the company is in the process
of rolling out of tip jar where followers can give the people that they are following tips in cash or
even in bitcoin the company is allowing ticketed spaces so this is hosting an online only event
and allows the creators to charge an entry fee the company has this thing called super follows which
is where when a follower can pay a premium price on a monthly basis to support a creator and they
also recently held out a thing called twitter blue which is a monthly fee that its users can play to
get access to extra features on twitter so what's the bull case for twitter well first and foremost
it is an addictive tool well brian and i can speak to that and when you have an addictive product it
usually ends up being a good investment as well secondly the management has sold in the game jack
dorsey founded the company left for a while and has come back and really has a solid vision for
what twitter can become in the future those other revenue streams as an example of that and then
third we want to see what happens with those other revenue streams importantly making this transition
turns twitter's users into its customers whereas in the past it's almost primarily advertisers now
that's users are its customers all right that sounds great but what can go wrong well first
the user growth here has been slowing down and there's an argument to me that twitter has a
really steep learning curve and it might not be usable by the vast majority of the population its
product is just far more niche than something like instagram or facebook two is the younger
crowd going to adopt twitter the younger crowd is really moving their time and attention towards
platforms like tik tok instagram and snapchat if twitter doesn't grab that younger crowd it
could become obsolete in the next 10 or 20 years three the company's free cash flow is positive
but this figure has actually been trending down recently i think that's because of some of the
investments that they're making into the business but that is something for investors to watch
before we get to our final scores we want to give a shout out to the motley fool 10 years ago brian
and i were both subscribers to the motley fool's flagship service stock advisor and since then have
worked as contractors there stock advisor has a long history of thumping the market so if you're
interested in getting half off of subscription to stock advisor and supporting this channel consider
joining at fool.com backslash feroldi all right so how did twitter do on our framework for me twitter
got a 77 which is in my investable category and i gave it a thumbs up in my portfolio for me this
company got a six and a half the main reason for that is that i am still very skeptical that the
network effect is a reliable moat surrounding this company's business fair enough alright so what
should investors watch moving forward first keep a keen eye on that monetizable daily active users
metric this is a key metric that's going to show you not only is the platform remaining popular
but is it continuing to attract new users second we want to look at those new products like tip jar
and twitter blue if they can really gain some traction it would make a meaningful difference
in the company's sales third keep an eye on the company's partnerships twitter is a live
platform and it goes with what is happening now in the past they've partnered with companies
like the nfl and other sports broadcasters to really showcase themselves and deeply integrate
themselves with their consumers we want to see more of that happening in the future overall i
think both of us believe that in twitter is an interesting investment and i love it when our
frameworks disagree for me this is an investable company but it's not yet there for you no it's
not it's a product i love using and i'm willing to admit that i might be very wrong about it but
i'm interested to see how it plays out well either way we're going to learn something about twitter
thanks so much for watching if you want us to review a stock please let us know in the comment
section below which one my name is Brian Feroldi and my mission is to spread financial wellness my
name is Brian Stoffel and my mission is to publish the rules of finance for anyone to see brian's out