Twitter (Underperform, $14.50) Stock view: Engagement could be improving, but still trailing peers On positive note, DAU growth, tweet impressions, and time spent growth have all been accelerating, and we won't be surprised if most metrics show stable growth in 1Q17 given event activity (political, sports, awards shows) in 1Q. However, the NFL season is over, the election surprise is slowing fading, competitive pressure is rising (particularly Instagram), and new monetization initiatives will take time, so we are more cautious on 2Q. The high level of executive churn also raises an element of strategic uncertainty that could continue to weigh on sentiment. While it’s possible Twitter could see moderate residual benefit from recent YouTube/Google Display Network boycotts, we continue to believe MAU growth acceleration is key to improving sentiment, and we continue to expect other platforms to grow much faster. The biggest upside driver for 1Q could be conservative guidance, which implied revenues would be down 17% y/y at the midpoint in 1Q. Longer-term, our primary concerns are user growth, rising competition in video, and lack of positive advertiser feedback. Despite execution on the live streaming initiative in 2016, MAU impact was underwhelming and we see risk of rising costs and/or content loss in 2017. At this point, it’s unclear how aggressively management will push live streaming in 2017, and early exploration of potential subscription revenue streams (enhanced Tweetdeck offering beta) could suggest potential strategic shifts. On the advertiser side, we are still hearing limited traction with Twitter’s ad platform changes and ROI measurement, and it seems experimental dollars are being moved to Snap. The biggest risk to our Underperform rating, in our view, is the underlying value of the Twitter platform for users and potential Artificial Intelligence (Al} signals. We remain on the sideline for now, with ever-present M&A potential providing s