Facebook Inc And Its Three Key Advantages Over Twitter Inc

Moncriefgeralt / Pixabay

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.

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.

Facebook leagues ahead in terms of user numbers

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.

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)



About the Author

Brendan Byrne
While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. To contact Brendan or give him an exclusive, please contact him at theflask@gmail.com

Be the first to comment on "Facebook Inc And Its Three Key Advantages Over Twitter Inc"

Leave a comment

Your email address will not be published.