(Reuters) - Video may have killed the radio star, but it could offer a lifeline to Twitter Inc (>> Twitter Inc). Just don't expect a turnaround in the company's flagging fortunes anytime soon, analysts said.
Twitter on Tuesday reported its slowest quarterly revenue growth since going public in 2013 as its user base grew by just 1 percent in the three months ended June.
The company's shares fell nearly 14 percent on Wednesday, wiping out about $1.7 billion of market value.
More was hoped for when co-founder Jack Dorsey returned to the company a year ago, first as interim chief executive and later as permanent CEO. Since he took over the interim role in July last year, Twitter has lost about half its market value.
Twitter has made it clear it sees video as a way ahead.
"We have become a video-centric platform. Video is now the number one ad format in terms of revenue on Twitter," Chief Operating Officer Adam Bain said on a conference call.
Twitter faces a tough battle to win market share, though, as it goes up against Alphabet Inc's (>> Alphabet Inc) long-established YouTube, Facebook Inc's (>> Facebook Inc) new Facebook Live and Instagram, and social media app Snapchat.
Highlighting its video strategy, Twitter has signed video deals with the National Football League, National Basketball League, Major League Baseball and the National Hockey League.
"Management clearly has gone all out over the last two quarters to aggregate video content and begin to sketch out a business case," Canaccord Genuity analyst Michael Graham said in a note to clients.
Still, he said, "We believe there will be heavy lifting to expand content and go to market for video advertisers, and this is likely to take time."
Canaccord Genuity cut its rating on the Twitter's stock to "hold" from "buy," and its price target to $16 from $20. The stock was trading at $16.18 in morning trading, having lost about 20 percent this year up to Tuesday's close.
At least eight other brokerages, including Goldman Sachs, cut their price targets on the stock, with Cowen & Co and Nomura lowering theirs to $13.
Of the analysts covering Twitter's stock, 12 rate it "buy" or higher and 24 "hold", while and six have a "sell" or equivalent rating. The median price target is $16.50.
Doug Anmuth, an analyst at J.P. Morgan Securities, said Twitter had potential to improve growth by tapping into video ad budgets over time but "the window of opportunity is closing as users and budgets move to competitors."
Anmuth cut his price target to $16 from $18.
Pacific Crest analyst Evan Wilson said Twitter's media deals could increase engagement from existing users but were unlikely to draw many new users as the content is available elsewhere.
"There will be revenue tied to these advertising deals, but without big user numbers we doubt it will be significantly accretive," he said in a research note.
Pivotal Research analyst Brian Wieser, who cut his share price target to $22 from $26, said there was good reason to believe that video initiatives would help re-accelerate growth in the fourth quarter and through 2017.
"However, we are mindful that it's possible that the company may have essentially plateaued and that ad revenue growth or even stability will be increasingly harder to come by," he said.
Nomura's Anthony DiClemente said it was difficult to say how much Twitter would benefit from its deals with the major sports leagues as details of the revenue splits were unclear.
"These factors could limit revenue upside even if new live content drives improvement in user metrics," he said.
(Reporting by Tenzin Pema; Additional reporting by Sweta Singh; Editing by Ted Kerr)
By Tenzin Pema