Thread by @LSValue

$TWTR Long Thesis:

-Twitter owns the Social Graph
-Can bring successful 3rd party products into platform and extract value from them (example Twitter Spaces -> Clubhouse)
-Elliot Management is pushing for Monetization
-Platform is ready to evolve after many years of development

Twitter has been a lackluster investment for many years since it came public in 2013. For many years twitter has been reluctant to monetize their social graph, in part fearing they would alienate some of their users.

The company has had a part time CEO for the last few years in Jack Dorsey, who is also the CEO of Square. Compounding some of the issues Twitter has struggled for many years with their technology.

They have been notoriously slow at rolling out new features of any substance. Many products that likely should have been developed by Twitter to help their community have been developed outside of Twitter but leveraged within Twitter through the social graph and sharing ability.

Some examples of these products are Patreon (a company in which you can support content creators), Medium (long form easy to use blogs), Clubhouse (audio meet-ups), Substack (paid content portal) and OnlyFans (exclusive content sharing) among others.

This has all set the stages for a dramatic shift that Twitter is undertaking to basically “take back” the value they deserve derived from their platform for themselves.

The reason they deserve it, is they control the platform that is the social graph of the internet for anyone with a peak interest in a particular topic. People that are interested in Finance flock to FinTwit, people interested in Molecular Biology flock to that corner of twitter

Twitter is the social graph for the world based on their self-selected interests or rather passions. That devotion, focus, and expert feedback is hard to get elsewhere.

Twitter is also the base minimum of information sharing (simple, character restrictive, not cute or flashy), meaning you can’t adequately build a social network more simplistic in terms of informational sharing. That has value, it is the base protocol for information sharing

So why now? You need to understand the history of Twitter to really understand why this investment makes sense now.

Twitter was originally a journaling / microblogging website, it originally had an open API in which 3rd parties developed applications utilizing its base microblogging data. Many apps that were created using the twitter API were later purchased by Twitter and became “Twitter"

Twitter has made 65 acquisitions since 2008, nearly as many as $FB which is in several different business categories and ~10 times its size. Most notability they bought Tweetie in 2010, which became their Iphone app and upwards of 10 advertising companies over the next decade.

This set the backdrop for a complicated aggregation and stabilization process needed to ingest the core Twitter platform into one cohesive codebase. Twitter of the mid-2010s was an amalgamation of several different Twitter related products.

But they were not integrated in the fashion that one would expect of a company that built their core product from the ground up. Finally it seems in 2021 Twitter has put much of their clean up of their historical acquisitions behind them.

Enter Elliot Management in March of 2020, led by the famed activist investor Paul Singer. Elliot Management saw what many others did in Twitter, a highly under monetized social network with huge potential and a part time CEO in Jack Dorsey.

Initially Elliot pushed for Dorsey to resign as CEO, but eventually they came to an agreement to allow Dorsey to remain CEO but they would be forced to initiate a $2B share buyback program and give Elliot Management and their partners Silver Lake two board seats.

This also prompted new initiatives at the company to increase revenue growth which they would showcase the their Investor Day.
These efforts began to show promise in late 2020 when Twitter has actually rolled out some new and exciting products include Twitter Spaces.

Twitter announced “SuperFollower” which is a paid content tier subscription similar to OnlyFans or Substack. There are several other product categories that Twitter could roll out which could be high margin and have large TAMs including in-app tipping and payments.

I believe if Twitter, with the push from investors, can get its act together and monetize their user engagement they could be worth 5 times their currently market capitalization of $58B.