This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Twitter's $13 Million Opportunity

Stocks in this article: TWTR

NEW YORK (TheStreet) -Twitter's (TWTR - Get Report) smallest source of revenue, the social network's data licensing arm, may be an important piece of the company's earnings that investors should pay attention to as the burgeoning communications powerhouse matures.

As it currently stands, Twitter's data licensing revenue is expected to come in at between $13-to-$15 million in the fourth-quarter, according to a range of estimates provided by analysts. That represents minimal year-over-year growth, and is about the only thing that may be fairly predictable in Twitter's first quarterly earnings report as a public company.

Analysts forecast that the company will generate about $218 million in fourth quarter revenue, and a negligible adjusted profit or loss for the quarter.

Other issues such as Twitter's valuation, the trends of its user and revenue growth, and whether or not the company can beat Wall Street consensus appear far harder to gauge.

Data licensing, however, is an area that could become a source of stability for the company in coming quarters. Twitter offers data licenses partners to access, search and analyze historical and real-time data on our platform. User have ample data to pore over. There have been over 350 billion tweets on the network.

But it doesn't appear that Twitter has been making much progress with its data licensing even as more and more data crosses the network. Single digit or mid-teens licensing revenue growth would mark far slower growth than Twitter's advertising platform, its biggest source of earnings.

In an age of big data and analytics-based decision making, the insights that Tweets could give into consumer habits, trends and even investment ideas seems like an opportunity for the company. It could also be an important source of diversification from volatile advertising revenues.

But, as it currently stands, Twitter's earnings are a bit of a black box and mostly reliant on advertising.

Twitter generates nearly all of its advertising revenue through the sale of Promoted Tweets, Promoted Accounts and Promoted Trends. The majority of those revenues are conducted on a pay-for-performance basis.

It is unlikely investors or even the company will have a firm handle on the long-term prospects of Twitter's advertising platform, especially on mobile devices for many more quarters.

Data licensing, however, could be far more predictable. Unfortunately, according to Twitter's S-1, the company expects data licensing to decrease as a percentage of its overall revenue over time.

At between $13 million-to-$15 million in quarterly revenue, data licensing currently looks like a missed opportunity for the fast-growing platform.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,395.98 +8.77 0.05%
S&P 500 2,032.23 +2.68 0.13%
NASDAQ 4,707.2170 +25.72 0.55%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs