Why Twitter Stock Just Jumped Back to Life

For a money-losing company teetering on the edge of irrelevancy, Twitter ( TWTR) is having a really, really good day.

Twitter stock finished Tuesday up by more than 11%, helping to cut into a brutal 2014 in which TWTR shares had dropped more than 40% from peak to trough.

What had Twitter stock in such a tizzy?

First came word that Twitter acquired data partner Gnip to increase the amount of data analytics it was offering to advertisers. That's big. Data isn't everything to advertisers - it's the only thing.

This is an especially important deal for TWTR given that a shockingly high 44% of all people with a Twitter account have never sent out a single tweet, and that most of the site's traffic comes from a relatively small number of people. The reason: Twitter is just too complicated for many people to use.

Which brings us to the second announcement...

According to media reports, Twitter has hired Google's Daniel Graf to head up its consumer products division. This is quite a coup for Twitter, and certainly the sexier of the two headlines helping spur Twitter stock.

Graf is one of the people behind the phenomenal success of Google Maps. He also ran Google's mobile apps lab for a while - a skillset that will be useful for Twitter as well.

The surprisingly good news almost certainly helped to light a short fuse.

According to the most recent data, short sellers held roughly 13% of the Twitter stock float. The buying, which started in midday, quickly accelerated, so it's very likely a number of people shorting TWTR stock were covering their positions on the way up.

Still, many more might just hang around.

Twitter's road ahead isn't easy. For one thing, it lags Facebook ( FB) considerably in a number of metrics. Twitter's monthly active users as of 2013 were 241 million, far below the 1.19 billion who avail themselves of Mark Zuckerberg's handiwork. Even more impressive is the difference in the time users spend on each site - 22.5 minutes for Facebook and 12.5 minutes for Twitter.

That last statistic is critical because the longer a user is on the site, the odds increase that a user will notice an ad.

TWTR is expected to lose money in the next two quarters, see revenue declines and earn a whopping 2 cents in profit for the year. Per-share profit for Facebook is expected to hit $1.26 on the strength of double-digit revenue increase.

Facebook is obviously the more proven - if not outright better - company right now.

But there is hope for Twitter users.

The addition of Daniel Graf probably doesn't mean you'll see Twitter Maps anytime soon, but given his pedigree, Graf very much could be a boon to the overall TWTR user experience, which could very much help some of the metrics like active users and time spent on site - things Twitter stock holders like to see.

Meanwhile, the Gnip acquisition is very much a nod to Facebook's generous data offerings - something salivated over by numerous big-money advertisers.

If investors are looking for a reason to buy TWTR stock off the bottom - after all, Twitter still is down 30% year-to-date - this pair of reasons are as good as any.

As of this writing, Jonathan Berr did not hold a position in any of the aforementioned securities.