These Charts Help Illustrate The Recent Struggles Of Facebook And Twitter

Social media giants Facebook, Inc. FB and Twitter, Inc. TWTR have both experienced significant market drawbacks in light of their earnings reports released last week.

What Happened

Last week, Facebook infamously experienced the biggest single-day market cap loss in U.S. history, having dropped nearly 25 percent. This drastic fall accounted for nearly $120 billion of the company’s market capitalization.

Research conducted by FactSet and Investopedia illustrates Facebook’s “Black Thursday” compared to other companies’ significant losses throughout history.

Similarly, Twitter shares have dropped over 20 percent since last week due to the decline of monthly active users. According to the company, this headwind was driven by new European privacy rules combined with the platform’s efforts to limit the spread of misinformation.

The Statista chart below shows how Twitter has struggled for years to attract new users.

Why It’s Important

Despite Wall Street’s hasty reactions to the events that transpired last week, specific data in each report demonstrates a much more optimistic outlook.

Facebook grew revenue by 42 percent year over year and Twitter beat estimates for revenue and earnings, while achieving its third quarter of profitability.

Coincidentally, according to projections by eMarketer, overall digital media consumption is declining.

What’s Next

“Because our media diet is becoming more saturated, all of the players in the ecosystem will have to work harder to produce better content and experiences to maintain our attention, whether that be via digital ads, social personalization algorithms, videos or articles,” wrote Sara Fischer of Axios.

The drop in shares may have more to do with the consumption of digital media and less to do with the companies themselves.

Related Links:

Facebook Lost $120 Billion In Market Cap: Here's Some Perspective

The Pros And Cons From Twitter's Q2 Earnings Report