Twitter Inc (NYSE:TWTR) shares continued their climb today, hitting a new intraday high of more than $52 a share briefly as investors grew more excited about the company’s growth prospects. The last time the company enjoyed an intra-day high of more than $50 a share was on the day of its initial public offering. On Monday, shares of Twitter ended the regular trading day up almost 10%, marking the company’s biggest gain in so far in its short life on the New York Stock Exchange.
This week’s climb comes in spite of the lack of any major announcements from Twitter—other than talk about its new advertising products.
Comparing Facebook and Twitter
Of course with all the action we’ve seen on Twitter Inc (NYSE:TWTR) since its IPO, there’s a natural comparison with Facebook Inc (NASDAQ:FB), which interestingly enough is also trading at around $50, Facebook shares rose nearly 3% in intraday trading today. Both social networks’ stocks have been seeing healthy traction this year.
But if you could pick just one of these two companies to invest in, which should it be? Speaking on CNN Money‘s “The Buzz,” Assistant Managing Editor Paul R. La Monica made the case for why he thinks Facebook is a better choice than Twitter.
Both Facebook and Twitter take a tumble
He notes that both Facebook Inc (NASDAQ:FB) and Twitter Inc (NYSE:TWTR) took a tumble after their respective IPOs. However, it took Facebook more than a year for its shares to recover and hit its IPO price again. Twitter, on the other hand, recovered almost right away.
At this point, Facebook is much bigger than Twitter, but La Monica ponders whether each of the social networks will hit $100 a share. He notes that they are both momentum stocks, but he predicts that it will be at least 2015 before either does hit the $100 mark.
Twitter isn’t profitable yet
His main reason for favoring Facebook Inc (NASDAQ:FB) over Twitter Inc (NYSE:TWTR) is because Twitter isn’t yet profitable, but Facebook is. He notes that Twitter is probably doing better on mobile at this stage in its life compared to where Facebook was at a comparable point in its life. But he also says Facebook has a lot more cash, and Twitter still has a lot to prove.
Twitter Inc (NYSE:TWTR) will release its first earnings report as a public company in January. He thinks that if the company doesn’t show signs that it is getting closer to becoming profitable, investors could become more skeptical about it, thus sending shares lower as a result.
Evercore analysts raised their target price for Twitter on Friday from $43 to $52 per share because of the completed rollout of the company’s Tailored Audiences ad product. They left their Overweight rating on the stock, so it’s worth questioning whether they will raise their target price yet again now that Twitter achieved their target, even though it was brief.