Is Twitter's (NYSE:TWTR) business a fad, or is it built to last?
To soothe any concerns that Twitter's business could soon fade into the past, investors need to know the company has a strength pronounced enough to suggest that it can dominate a particular niche. But what is Twitter's strength? And how pronounced is it?
Data from a new study, conducted by Pew Research in association with the John S. and James L Knight Foundation, suggests Twitter may, indeed, have a unique and prominent strength.
Twitter's mission is simple. The company "strives to give everyone the power to create and share ideas and information instantly, without barriers," reads Twitter's investor-relations website.
For anyone using Twitter on a regular basis, it's clear that the social network follows through on this mission. But can Twitter's ability to serve as a platform focused on sharing ideas and news instantly be measured? And if it can, how well is Twitter performing in this area?
At least when it comes to news, which Pew defines as "information about events and issues beyond just your friends and family," Twitter's ability to share ideas and information instantly can be measured. According to Pew, users rely on both Twitter and Facebook to discover and consume news. Sixty-three percent of both Twitter and Facebook's user base use the services to consume news. While this data shows how important news is to Twitter's users, it also suggests Facebook's platform is just as relevant for this purpose to its users, making Twitter look like nothing more than a less capable and and smaller platform than Facebook.
But the smaller social network stands out by a long shot when measured by the proportion of users who keep up with breaking news:
Although both social networks have the same portion of users getting news on these sites, there are significant differences in their potential news distribution strengths. The proportion of users who say they follow breaking news on Twitter, for example, is nearly twice as high as those who say they do so on Facebook (59% vs. 31%) -- lending support, perhaps, to the view that Twitter's great strength is providing as-it-happens coverage and commentary on live events.
Twitter's hyper-focused approach to building a platform centered on news has encouraged an outsized proportion of its users to use the platform for this purpose, clearly making Twitter's emphasis on breaking news the company's strength strength.
And Twitter is developing this strength in breaking news beyond its native platform. The company's March 2015 acquisition of Periscope, a live-streaming app that gives anyone with a smartphone the ability to report live events on video in a matter of seconds, is beginning to look like a smart bet. Periscope is turning out to be a leader in its nascent space. The new service is well ahead of competitor Meerkat in popularity when measured by social buzz, according to Adobe's Digital Index. And Periscope is growing fast, with mentions of Periscope live streams on Twitter doubling in the past two months.
Is Twitter's lead over Facebook in building a platform where users can easily follow and share breaking news strong enough to prove the company can't be driven out of business by a new, hot social network someday? Probably not. Even Pew's convincing data on the social network's ability to succeed in this segment isn't enough evidence to make Twitter's future success certain. But Twitter's execution at remaining relevant in breaking news, even as its user base grows, at least suggests the company is likely to remain a leader in this segment for the long haul.
Twitter shareholders concerned about the stock's sell-off in recent months should brush off the hard times and focus on whether or not Twitter is still doing well what it does best: "give everyone the power to create and share ideas and information instantly, without barriers." And Pew's data suggests Twitter is on track.
Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.