Stock Wars: Facebook Vs. Twitter

Facebook, Inc. FB and Twitter Inc TWTR have been competitors for many years. Today, we take a look at how the social media companies stack up when compared side by side.

2 Big IPOs: In 2012, Facebook held a massive IPO that valued the company at $100 billion. Shares were priced at $38, but ended the first week of trading at less than $27.

Twitter held its IPO in 2013, valuing the company at $14 billion. On its first day of trading, the stock rose 73%, good for a valuation of more than $24 billion.

Facebook, Twitter Financials: Facebook increased its revenue by a considerable amount over the last five years.

Revenue came in at $17.9 billion, $27.6 billion, $40.7 billion, $55.8 billion and $70.7 billion, respectively, in the last five years ending in fiscal 2019.

Earnings per share have jumped from $1.31 in fiscal 2015 to $6.48 in fiscal 2019, growing every year along the way.

Twitter grew its revenue from $2.22 billion in 2015 to $3.46 billion in 2019. Revenue declined in 2017 for the company, showing signs that Twitter might not be the high-growth stock investors thought it was.

The company also posted losses in 2015, 2016 and 2017, before posting a profit of $1.60 per share in 2018 and $1.90 per share in 2019.

Facebook receives almost all of its revenue from advertising. Twitter also receives the majority of its revenue from advertising, but also sees around 12%-15% from data licensing, where it sells information to third parties.

This could give Twitter the upper hand in today's environment of social media advertising freezes by many large companies.

Facebook, Twitter Users: Facebook ended 2019 with an average of 2.5 billion monthly active users.

The company has seen impressive growth in daily active users, going from 1.23 billion in 2016 to 1.66 billion at the end of 2019.

Growth in the United States and Canada has slowed down, with the platform rising from 180 million daily active users in 2016 to 190 million in 2019 in those countries.

The company has seen impressive user gains in international territories.

Twitter ended 2019 with 152 million daily active users, including 31 million in the United States.

Facebook, Twitter Acquisitions: Acquisitons have been a key to Facebook's success.

Facebook acquired Instagram in 2012, WhatsApp in 2014 and Oculus in 2014. Instagram is a huge star for the company, with an enormous user base and good advertising revenue. WhatsApp has helped Facebook expand internationally.

Instagram has been valued at as much as $100 billion by analysts and could be a spin-off candidate sometime in the future as politicians push for Facebook to break up.

Twitter has not had as much success with acquisitions. The company’s acquisitions of Periscope and Vine have failed to move the needle in terms of user growth or additional revenue.

Twitter shut down Vine, a short-form video platform, after acquiring it.

Facebook, Twitter Stock Performance: Shareholders of Facebook have done well since the time of its IPO, as shares are now trading over $270 in 2020.

Facebook has a market capitalization of $760 billion. Shares are up 30% in 2020. Over the last five years, Facebook shares are up 210%.

Twitter had the hotter IPO of the two social media companies, but hasn’t had the best performance in recent years.

Twitter has a market capitalization of $31 billion. Shares are up 22% in 2020 and have increased a little more than 50% in the last five years.

What’s Next: Facebook continues to acquire small companies and push into new platforms like livestreaming, gaming and smart speakers.

Instagram's valuation has increased substantially, which could continue if it is voluntarily spun off or as a forced transaction due to political pressure.

Twitter has started to see advertising revenue decline in 2020, which could spell trouble for the long term. CEO Jack Dorsey has publicly said the company is testing a subscription model, which could increase revenue and dependence on advertising — but also equally impact the company’s daily and monthly active user base.

Facebook CEO Mark Zuckerberg. Courtesy photo.