Although the two companies often come up in discussions of social media, there are great differences between the two.
For starters, Facebook has 1 billion more users than Twitter. It also has a well-defined advertising strategy, something which Twitter is sorely lacking. Recent earnings reports from both companies illustrate some of the key differences, writes Taylor Tepper for Time.
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Ad revenues growing at both companies
Facebook is worth over 10 times as much as Twitter, and Wall Street investors are falling out of love with the latter as it fails to demonstrate increases in user numbers and ad revenue.
Ad revenues continue to grow at Facebook. The company took $3.8 billion in Q2, compared to $2.7 billion last year, which represents a 41% growth. Facebook also demonstrated its global reach as international ad revenue reached $2 billion.
Further growth is expected as Facebook leverages Instagram, Messenger and WhatsApp.
Revenue growth was also stronger than expected at Twitter, with ad sales increasing to $452 million compared to $277 million last year. Analysts were surprised at the news, which came as a welcome boost to investors who have watched the company’s stock price slide by 25% in Q1 this year.
When it comes to users, Facebook is way ahead of Twitter. 1.5 billion people use Facebook, which represents 21% of the global population. In the U.S. and Canada, 213 million users come from a total population of 355 million.
These North American users are particularly valuable to Facebook, which earns $8.63 in ad revenue per user in the region compared to a global average of $2.61.
Mobile-only users jumped to 655 million around the world, up from 399 million last year.
A stagnant user base is a major reason for the double digit drop in Twitter’s stock price. According to CFO Anthony Noto, it will be “a considerable time”: before the microblogging site sees significant growth.
66 million people in the U.S. use Twitter each month, up from 60 million in 2014, of a total of 250 million globally.
Valuation another stumbling block for Twitter
Investors pay comparatively more to invest in Twitter. Its stock’s price/earnings ratio is 64, according to Morning Star, compared to Facebook’s P/E of 37.
Twitter also recently cut expected outgoings on capital investment to $450-550 million. By comparison Facebook spent $549 million in Q2.
Overall it is obvious that Facebook is way ahead of Twitter by conventional measures, and the Twitter management team has a great deal of work to do to regain the trust of investors.