Two Charts That Show Twitter's Periscope Investment Could Pay Off in Spades

Brian Pitz at Jefferies reacted to news that Periscope, Twitter Inc's TWTR live video streaming app, reached 10 million users after launching just four months ago. Pitz said that Periscope's management is pushing analysts to look at a daily time watched metric – which currently sits at 40 years of video watched per day – instead of a daily active users number. At the same time, the company said that it had roughly 2 million daily active users.

Jefferies included two charts in their analysis, which shows both of these metrics turning to exponential growth. As the chart below indicates, Periscope's time watched per day saw large gains in mid-May, growing from 5 years per day to more than 15. Since then, it has gained to more than 40 YPD, with strong growth again in July.

Daily active users has seen similar growth from around 400,000 in mid-May to nearly 2 million in early August.

Jefferies estimated that this is just the beginning of growth in online video. And alongside growth in users will come growth in ads. By 2017, the firm said that the online video ad market will be a $17 billion opportunity in the U.S. alone. This will see a corresponding shift of TV ad budgets towards online video. "As the leading live-streaming video app," Periscope will "benefit from the growing consumption of online video," Pitz predicted.

Jefferies has a $56 price target and Buy rating on Twitter. The stock has significantly underperformed in the past two quarters, falling 19 percent year to date, but 44 percent in since late April. This month, the stock hit its all-time low of $26.87, but has since come off that level a bit.