Twitter Inc. (NYSE:TWTR) stock was up 1.87% in afternoon trading on March 28. Shares of Twitter have climbed 16.9% in 2018 as the stock gained momentum after clamping down on its user base in response to demands from U.S. officials. Its most recent move has been to ban cryptocurrency advertisements on its platform.
The data scandal at Facebook Inc. has throttled its stock, but the possibility of data regulations could be extremely damaging to Twitter. For the first time since it was publicly listed Twitter reported profitability in its last quarterly report. Data licensing revenue hit $333 million compared to $282 million in 2016 while advertising revenue fell from $2.25 billion to $2.11 billion. Short seller Andrew Left of Citron Research has said in a recent newsletter that Twitter faces a major crisis if its data licensing revenue is threatened.
Facebook CEO Mark Zuckerberg is set to testify before U.S. Congress in the coming weeks in light of the Cambridge Analytica data scandal. Social media giants have been in the crosshairs of the mainstream media and influential U.S. officials since the 2016 election. Powerful voices in the establishment have been pushing for greater censorship on social media, citing concerns over the integrity of democratic processes in the U.S. and elsewhere.
Twitter has been linked to buyout rumours for some time now, but experts believe that this is unlikely to occur before it cedes to the demands of regulators. Investors should be watching the development of legislation that will further regulate tech giants closely in the coming months.
