Twitter Inc’s (NYSE:TWTR) stock has dropped to its lowest in the past six weeks following the recent Citron Research betting against the firm due to feeble data privacy regulations of the company. Several social media companies including Facebook, Google, and Twitter are expected to face Chuck Grassley, the Senate Judiciary Chairman on the data privacy regulations on April 10.
According to Citron, the social media giant is the most exposed firm to the privacy regulations. Hence Citron decided to borrow the firm’s shares with a bet anticipating that the prices will plunge so that it can repurchase them to replace the borrowed ones. Citron further commented that most of Twitter’s revenue is accrued from the data licensing entity, which mostly comes from selling private data messages.
However, Twitter has come out to defend itself by claiming that its media platform is generally public and can be accessed by anyone and that it’s data licensing business doesn’t sell data messages. Recently, the social media firms have been blamed for failing to protect the privacy of the users following the previous reports that Facebook failed to guard the private messages of its users leading to the access of data by Cambridge Analytica, a political consulting firm.
Twitter sells a selection of data access to content developers and it’s striving to increase its data licensing unit as well as the advertising revenue. Corporate clients are usually given the largest data access such as the access to Tweets lasting 30 days or more. But before accessing the data, the client must state the concrete reason for collecting such data.
Twitter’s data licensing business is a lucrative business opportunity. Last year, for instance, the company generated over $333 million from the previous $282 million it earned in 2016 from selling data licensing including selling of user data from private messages. Generally, the data licensing segment could account for over 80% of the total revenue generated from the firm’s different entities.