Can ‘Project Lightning’ Give Twitter a Fresh Jolt?
The ubiquitous blue bird associated with Twitter (TWTR) has been incessantly chirping out new announcements this month as the social media phenom tries to pick itself back up after being slammed for weak earnings growth and the underperformance of its stock.
Projections from data firm eMarketer call for the Twitter monthly user base to grow at a measly 14.1 percent this year, compared with more than 30 percent growth two years ago, according to Reuters.
While the news last week that CEO Dick Costolo was relinquishing the corner office was not a shock since he has offered to resign in the past, the appointment of co-founder and former chief executive Jack Dorsey as provisional CEO caused a stir in the business and tech worlds. Not only is Dorsey the CEO of his own mobile payments startup, Square, but he was reportedly removed from his role as CEO of Twitter in 2008.
The shakeup caused a brief spike in the company’s shares, but the stock is now back to where it had been before the announcement — and if it’s going to climb higher, investors may to need to see some other changes, too.
That’s where the slew of product announcements comes in. The latest, revealed yesterday on Buzzfeed, is called Project Lightning. Essentially, if there’s a hot topic that people are tweeting about — either prescheduled events, breaking news or ongoing events — Twitter has created an easy way for users to view the most popular and relevant tweets, images and videos, without having to sift through every tedious comment and retweet. Twitter will have a team of editors select the tweets they think will be most popular on the stories they see as the biggest of the moment.
The goal is to make Twitter easier to use and more engaging for an audience that isn’t necessarily interested in actively tweeting. (Twitter’s stock jumped more than 4 percent Friday in response to the new product announcement, its best day in months.) Similarly, Twitter is trying to bring down other obstacles to using its service. The same day the news was released about Costolo, Twitter also announced the removal of the 140-character limit on the direct messages feature. Getting rid of the limit is a step by the company to keep up with rival social networks and messaging apps, like Facebook and WhatsApp.
Related: Instagram Takes Steps to Open Platform to Advertisers
At the same time it tries to draw in users, Twitter executives know they must do more to attract advertisers. Six ad executives surveyed recently by Reuters said they spend more money on rival platforms because they have more users, better data to target consumers and create more effective ad content. To combat that perception, Twitter this week announced a push to bring in advertisers by rolling out video ads that will automatically play in a user’s timeline. Though initially muted, if a user clicks on the video it will switch to full-screen mode with sound. Advertisers will only be charged when a user has watched at least three seconds of the video on a full screen.
Both Facebook and Instagram offer an almost identical ad feature.
Chart of the Day: A Buying Binge Driven by Tax Cuts
The Wall Street Journal reports that the tax cuts and economic environment are prompting U.S. companies to go on a buying binge: “Mergers and acquisitions announced by U.S. acquirers so far in 2018 are running at the highest dollar volume since the first two months of 2000, according to Dealogic. Thomson Reuters, which publishes slightly different numbers, puts it at the highest since the start of 2007.”
Number of the Day: 5.5 Percent
Health care spending in the U.S. will grow at an average annual rate of 5.5 percent from 2017 through 2026, according to new estimates published in Health Affairs by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS).
The projections mean that health care spending would rise as a share of the economy from 17.9 percent in 2016 to 19.7 percent in 2026.
Trump Clearly Has No Problem with Debt and Deficits
A self-proclaimed “king of debt,” President Trump has produced a budget that promises red ink as far as the eye can see. With last year's $1.5 trillion tax cut reducing revenues, the White House gave up even trying to pretend that its budget would balance anytime soon, and even the rosy economic projections contained in the budget couldn’t produce enough revenues, however fanciful, to cover the shortfall.
The Trump budget spends as much over 10 years as any budget produced by President Barack Obama, according to Jim Tankersley of The New York Times. And it projects total deficits of more than $7 trillion over the next decade — "a number that could double if the administration turns out to be overestimating economic growth and if the $3 trillion in spending cuts the White House has floated do not materialize in Congress,” Tankersley says.
Trump — who once promised to both balance the budget and pay down the national debt — isn’t the only one throwing off the shackles of fiscal restraint. Republicans as a whole appear to be embracing a new set of economic preferences defined by lower taxes and higher spending, in what Bloomberg describes as a “striking turnabout” in attitudes toward deficits and the national debt.
But some conservatives tell Tankersley that the GOP's core beliefs on spending and debt remain intact — and that spending on Social Security and Medicare, the primary drivers of the national debt, are all that matters when it comes to implementing fiscal restraint.
“They know that right now, a fundamental reform of entitlements won’t happen," John H. Cochrane, an economist at Stanford University’s Hoover Institution, tells Tankersley. "So, they have avoided weekly chaos and gotten needed military spending through by opening the spending bill, and they got an important reduction in growth-distorting marginal corporate rates through by accepting a bit more deficits. They know that can’t be the end of the story.”
Democrats, of course, have warned that the next chapter in the tale will involve big cuts to Social Security and Medicare. Even before we get there, though, Tankersley questions whether the GOP approach stands up to scrutiny: "This is a bit like saying, only regular exercise will keep America from having a fatal heart attack, so, you know, it's ok to eat a few more hamburgers now."
Part of the Shutdown-Ending Deal: $31 Billion More in Tax Cuts
Margot Sanger-Katz and Jim Tankersley in The New York Times: “The deal struck by Democrats and Republicans on Monday to end a brief government shutdown contains $31 billion in tax cuts, including a temporary delay in implementing three health care-related taxes.”
“Those delays, which enjoy varying degrees of bipartisan support, are not offset by any spending cuts or tax increases, and thus will add to a federal budget deficit that is already projected to increase rapidly as last year’s mammoth new tax law takes effect.”
IRS Paid $20 Million to Collect $6.7 Million in Tax Debts
Congress passed a law in 2015 requiring the IRS to use private debt collection agencies to pursue “inactive tax receivables,” but the financial results are not encouraging so far, according to a new taxpayer advocate report out Wednesday.
In fiscal year 2017, the IRS received $6.7 million from taxpayers whose debts were assigned to private collection agencies, but the agencies were paid $20 million – “three times the amount collected,” the report helpfully points out.
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