- TWTR has suspended over 70M accounts: The Washington Post reported that TWTR is suspending over 1M accounts per day, which is 2x more than its usual pace. The article also suggests that 2Q18 MAUs may decline as a result of the crackdown, although it also quotes Del Harvey (VP of Trust and Safety) as saying that the crackdown hasn't had "a ton of impact" on TWTR's active users.
- Issue likely due to repeat offenders: The reaction in TWTR shares today suggests the street is questioning TWTR's reported percentages of fake/bot accounts and/or assuming a precipitous decline in 2Q18 MAUs given the sheer volume of cancellations. But we have to remember that these account suspensions are likely due to repeat offenders who've likely created and have had multiple accounts suspended. For context, the metrics above suggest TWTR suspended ~45M accounts back in 1Q18 without any discernible impact on either MAUs or DAUs. So while 2Q18 MAUs may decline given the increased pace of suspensions, we wouldn't expect a major gap down; especially since many of those accounts may have already returned under a different handle.
- De-risked the print? The sell-off today suggests an implied miss in TWTR's MAU and potentially DAU metrics as well. On the latter, we estimate that TWTR only needs about 1% of sequential DAU growth to maintain double-digit y/y growth. The question there is whether the aforementioned crackdown will negate the tailwind from the World Cup. Regardless, a miss in both user metrics is probably now embedded in the stock, so the focus of the print will likely shift toward its financial metrics, and the 2Q18 print was always the apex of our original 2018 long thesis.
We recently hosted our mid-year thesis update call on our Best Ideas, which you can access at the link below. We addressed TWTR in the beginning of the call [1:53-17:54].
INTERNET BEST IDEAS UPDATE CALL: CLICK HERE for video link and slide deck, and dial-in.
Let us know if you have any questions or would like to discuss in more detail.
