Twitter Inc. shares rose as much as 9.7% Wednesday amid speculation that the social media company is considering a paid subscription-based service.
The company recently posted a job listing announcing a new team called Gryphon, that’s “building a subscription platform, one that can be reused by other teams in the future.” The new group of web engineers will work closely with the payments team and the Twitter.com group, according to theposting. News of the announcement prompted speculation onTwitter.
The stock rose the most intraday in more than two months, to $36.18. The company didn’t immediately respond to a request for comment.
The idea of a Twitter subscription product has been discussed for years as an alternative to the company’s current advertising and data-driven businesses. Former Chief Operating Officer Anthony Noto said in 2017 that Twitter wasconsidering charging for enhanced features inside Tweetdeck, the Twitter product for power users, though that never materialized. More than 84% of Twitter revenue comes from advertising, a business that was growing before the coronavirus pandemic swept the globe. Adding a subscription service could help it diversify. In the first quarter, Twitter’ssales rose just 3%, the smallest increase in more than two years.
Chief Executive Officer Jack Dorsey is also under pressure right now from activist investors to accelerate the company’s business, and it’s possible a subscription service that includes special features for the most frequent users could provide more revenue at a time when advertising budgets are pulling back.
Simply charging for Twitter’s core product, though, was always seen as a potential bottleneck to user growth, which is important for a company that makes most of its money from advertising.
“We do believe that there is a real importance that Twitter is accessible to everyone in the world no matter what their economic stature is and where they are in life, so the general case has been to make Twitter free and open,” Noto said in 2017.
Facebook Inc. CEO Mark Zuckerberg has also been asked about offering a paid version of the social network over the years, but has argued that the platform should be free in order to reach the most people.
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