Will Twitter (TWTR) Stock be Helped by Autoplay Videos Launch?

NEW YORK (TheStreet) -- Twitter (TWTR), in an effort to boost the value of its advertising platform, is rolling out its first automatic, ad-playing videos, following in the footsteps of Google (GOOGL) and Facebook (FB), according to The Wall Street Journal.

The company has been testing out the auto-play function for several months, and now, when users scroll through their Twitter feed, videos will begin to automatically play while muted, the Journal noted.

The way videos appear is similar to Facebook's videos, which was introduced in 2013. Currently, Facebook's videos are generating about four billion video views a day, according to the Journal.

The auto-play video represents a "big financial opportunity" for the company as video ads command higher ad rates than traditional display ads, the Journal added.

However, "There are many places for advertisers to consider for video ads and the most of the focus is on YouTube and Facebook," said eMarketer's analyst Debra Williamson. "One of the things Twitter struggles with is reach because it is not as big as some of the other properties."

On Wednesday, Twitter shares are falling 0.28% to $34.73.

Separately, TheStreet Ratings team rates TWITTER INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate TWITTER INC (TWTR) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Internet Software & Services industry average. The net income has decreased by 22.7% when compared to the same quarter one year ago, dropping from -$132.36 million to -$162.44 million.
  • In its most recent trading session, TWTR has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • TWITTER INC's earnings per share declined by 8.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TWITTER INC continued to lose money by earning -$0.96 versus -$1.05 in the prior year. This year, the market expects an improvement in earnings ($0.34 versus -$0.96).
  • Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 10.08 is very high and demonstrates very strong liquidity.
  • Compared to other companies in the Internet Software & Services industry and the overall market, TWITTER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: TWTR Ratings Report

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