Why Twitter And Snap Have Monetization Problems

MoffetNathanson's Michael Nathanson was a guest on CNBC's "Squawk Box" segment on Wednesday to discuss a problem that plagues both Twitter Inc TWTR and Snap Inc SNAP's stock: monetization.

President Trump Isn't A Positive

Nathanson said Twitter's platform isn't set up properly to be monetized — and the company may have Trump to blame. For example, the president may be credited with bringing users to the platform, but his recent Tweet about U.S.–Germany relations will cause at least some advertisers to avoid the platform.

"If you are BMW or Mercedes Benz do you want to advertise in a Tweet stream about your great car," he hypothetically asked before adding, "I think they are going to have a hard time monetizing their traffic."

Nathanson said Twitter will eventually be bought out but at a valuation that is half of the price it is today.

What's Wrong With Snap?

Moving on to Snap, Nathanson's bearish stance stems from a series of focus groups his firm conducted with the social media platform's key demographic group, high school students.

Despite the fact that many of the core users can spend two hours on the platform per day, the fact remains this group isn't shopping for big ticket items like cars and even homes. As such, the advertising opportunity for Snap is somewhere in between "not that large."

While the analyst did acknowledge it is possible the core demographic will stick with the Snapchat platform over many years, there's a long way to go before the core group is in the work force and represents an attractive opportunity for marketers.

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