Twitter (TWTR) Stock: Will SoundCloud Help?


Twitter Inc (NYSE: TWTR)

Twitter has had an incredibly rough time in the market as of late. However, by looking at the past couple of trading sessions, it’s hard to imagine that the company was facing hard times. There’s a good reason for the gains. The company recently invested big money in SoundCloud; but will this really help the company’s long game? Today, we’ll talk about the investment the company made, how the market reacted to the news, and what we can expect to see from TWTR moving forward.

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TWTR Invests In SoundCloud

As mentioned above, Twitter is having a strong day in the market today after announcing that it had made an investment in a streaming music service known as SoundCloud. According to recent reports, TWTR invested $70 million into the service. The idea behind the investment is that it will help to support ongoing efforts with content creators. Here’s what Jack Dorsey, CEO at TWTR, had to say:

Earlier this year we made an investment in SoundCLoud through Twitter Ventures to help support some of our efforts with creators… They’ve been great partners of ours over the years and their community-supported approach mirrors ours in many ways.”

How The Market Reacted To The News

As investors, one of the first things that we learn is that the news moves the market. When strong news is released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with that company as a result. In this particular case, TWTR investors are taking the news as positive. This can be seen in the gains we’re seeing in the value of the stock today. Currently (11:22), the stock is trading at $16.26 after a gain of $0.90 per share, or 5.89%, thus far today.

What We Can Expect To See Moving Forward

While investors seem to be excited about the fact that TWTR has made the decision to invest in SoundCloud, I have to say that I maintain a very bearish opinion with regard to what we can expect to see from the stock moving forward.

First and foremost, let’s discuss SoundCloud. The truth is that this isn’t the first time Twitter has invested in the streaming music service. In fact, it can be argued that the two companies have been working together for quite some time. Just look at Dorsey’s comments above. He said that they have been great partners through the years! The truth is that this relationship is nothing new, and hasn’t led to anything fruitful in the past. With that said, I’m not expecting to see anything dramatic out of the relationship that will help Twitter moving forward.

With all of that said, TWTR remains a stock that is drowning in concern. Through the years, the company has proven its fundamental lack of ability to grow. While user growth has been a problem for some time now, it seems as though no one in management has the ability to create a plan, and follow through with that plan, to solve the issue. At the end of the day, growth in TWTR hinges on one thing – user growth. Until Twitter proves to me that they have been working on user growth, and that they have succeeded in pushing the numbers up, I will maintain a bearish opinion on the stock!

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What Do You Think?

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[Image Courtesy of Pixabay]


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