Facebook Inc vs Twitter Inc In Earnings

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Facebook Inc (NASDAQ:FB) is scheduled to release its third quarter earnings report tonight, and Twitter Inc (NYSE:TWTR) released its report last night. The two companies continue to be compared to each other, but the fact is that they aren’t really comparable.

Twitter disappoints on user growth

Twitter posted solid earnings results last night, but investors were again disappointed by lower-than-expected user growth. Paul Sweeney of Bloomberg Intelligence said today that Twitter’s problem is that it lacks Facebook’s status as a mainstream social network. He noted that the micro-blogging platform is really growing its revenue, even guiding for fourth quarter revenue that’s in line with estimates. However, that isn’t enough to convince investors to stay in the stock.

“Investors are saying that the valuations we’re being asked to pay for these stocks suggest that these companies are going to continue to grow significantly into the future,” said Sweeney today on Bloomberg TV. “And what’s the primary metric for future growth is the growth of my user base, if I can grow my user base, I can attract advertisers and maybe even some ecommerce and things like that.”

Twitter CEO Dick Costolo said on the earnings call last night that their top priority is to reignite user growth. But investors know that talk is cheap, and they want to see real growth.

Facebook earnings to focus on mobile

Looking ahead to Facebook’s earnings report tonight, investors will be more focused on growth in the mobile ad business. This has been a key metric for the social network for some time, and it highlights how different Facebook really is from Twitter.

In Facebook’s earnings tonight, investors want to hear about new ways the company can grow revenue in addition to how much mobile advertising is contributing to the company’s overall growth.

Twitter isn’t Facebook

Forbes contributor Robert Hof noted that Twitter management is at least partially to blame for the view that Twitter is the next Facebook. Costolo’s comments about trying to build the world’s largest daily audience suggest that they’re trying to grow their audience to be even bigger than Facebook’s.

However, he also explains why Twitter probably won’t ever be Facebook and why that’s OK. He notes that Twitter’s ad business is expected to top $1 billion in revenue this year and is just about doubling annually. Also he noted that 85% of Twitter’s ad revenue is on mobile devices, where growth is faster and, in fact, where investors want Facebook to be.

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