Experts say Brazil and Germany are the favorites to win the World Cup, but some stock-market analysts are betting on Twitter Inc.
The social-media platform saw a nice boost in engagement—and revenue—during the last World Cup four years ago, before video had become a big focus for the company. Now Twitter
has a more refined platform and strategy, which means the event could deliver an even larger boost this time around.
“Twitter’s partnership with Fox Sports will provide near real-time highlights of every goal scored and video is a major area of strength for Twitter, already driving more than half of the company’s total ad revenue,” wrote J.P. Morgan analyst Doug Anmuth, who raised his price target on the stock Tuesday to $50, the highest of the 37 analysts surveyed by FactSet. Shares jumped 4.8% to the highest level since April 2015.
Since the last World Cup, Twitter has added the ability to quote and bookmark tweets, and in general it’s now easier for users to discover content that’s relevant to their interests. Under the company’s deal with Fox Sports, the network will upload video footage of all goals scored “within seconds” and produce both pre-game shows and clips with player interviews.
“We believe Twitter is well positioned to benefit from ad opportunities due to increased daily audience on the platform, strong content partnerships and improved ad formats,” Anmuth wrote. The World Cup can affect results for the second and third quarters, with the potential to boost monthly- and daily-active-user counts, particularly overseas. Back in 2014, Twitter’s management said that the World Cup didn’t have an impact on monthly active users, though some were skeptical.
MKM Partners analyst Rob Sanderson wrote last week that the 2014 World Cup likely brought in about $24 million in incremental second-quarter revenue for Twitter, and he thinks the event could be an “even bigger deal” this year, as consensus estimates seem to be calling for an incremental $30 million boost.
Sanderson pointed out that the company is now generating nearly half its revenue from international markets, compared with just a third at the time of the last World Cup. This international audience is important given that the U.S. didn’t qualify for the competition.
A win for Twitter, though, might not come at the expense of other internet companies. Netflix Inc.
Chief Executive Reed Hastings said back in 2014 that the company was initially concerned that the World Cup would impact its net-additions trajectory, especially in the host country of Brazil. Netflix instead saw a “straight” line of net additions during the second quarter.
Twitter shares are up 154% over the past 12 months, while Netflix’s stock has gained 139% and the S&P 500
has climbed 15%.