Is Facebook's WhatsApp A Threat To Twitter?

  • Some sites have reportedly found more content sharing activity on WhatsApp than Twitter.
  • Now Twitter seems to have added a WhatsApp direct sharing button on its mobile app.
  • The new feature might help Twitter but its valuations are expensive when compared to those of Facebook.

Does Facebooks Whatsapp Pose A Threat To Twitter

If you've used Twitter's (NYSE:TWTR) mobile app lately, you might have noticed the addition of a green sharing button placed in a corner of the app. That button belongs to none other than arch rival Facebook (NASDAQ:FB) owned Whatsapp. That's right, Twitter has integrated a Whatsapp direct share button in its mobile app, but why? Even as Twitter works on taking on Whatsapp with a revamped direct messaging service, the latter seems to have become a platform that publishers might not want to ignore. Some publishers have reportedly found that more shares are made to whatsapp than to twitter on iOS.

Twitter App Has Integrated Whatsapp

So far, if you wanted to share a post onto Whatsapp, you would have to hit the share button which would then display a list of apps to choose from. The button allows users to share a tweet directly onto Whatsapp. The feature it seems is still being tested as it isn’t available to all of Twitter’s users.

Whatsapp Share Button on Twitter and Buzzfeed

Is WhatsApp A Threat To Twitter?

According to Re/Code, Whatsapp launched the platform late last year (2013), which allows other companies to include a “hook” in their own apps, enabling users to share content on the messaging service. The article, published in Feb 2014 also talks about the outcomes that testers of this feature have found.

“Early testers of the WhatsApp share button included BuzzFeed and Shazam.

In fact, BuzzFeed is already seeing more shares to WhatsApp than to Twitter on iOS, the company told Re/code.”

Now, buzzfeed has integrated the button into its mobile website, as seen in the screenshot above. In another report by Digiday, the popular sports site FTW has also seen similar outcomes. As per the report, within a week of introducing the WhatsApp sharing button, on its mobile site, FTW saw Whatsapp shares rise to 18% of the site’s total shares. Here again WhatsApp outshined Twitter’s share of 13%. Interestingly Facebook accounted for 34% of the sharing activity, almost on par with 35% from e-mail, making Facebook (including WhatsApp) the most popular sharing platform on the site.

Photo editing app Aviary reported that WhatsApp share numbers (7%) were almost on par with Facebook and Instagram, which stood at 8% each in November 2013. The case is similar with music app Shazam, which sees about 10% of its shares from WhatsApp.

To sum up, WhatsApp seems to have gained some ground as a platform to which users share content. As evident, in some cases, it’s a more popular sharing destination than Twitter. This in spite of the fact that WhatsApp doesn’t have newsfeeds by publishers, a benefit that public sharing platforms Facebook and Twitter enjoy.

Whatsapp referral landing page

In an earlier article on Twitter’s poor user growth we’d highlighted how the platform’s user growth isn’t as great as the tally of 271 million users suggests. It’s tough to say which of the platforms will gain more from the new feature, but it does open up another window for user growth and engagement on Twitter, while adding to the content available for direct sharing on WhatsApp.

User’s who click on links in Whatsapp land on the tweet and not on the page linked in the tweet. So, any referrals from WhatsApp represent an opportunity to acquire new users or retain old ones as active users. Twitter could stand to gain a lot from WhatsApp which now has 600 million monthly active users.

Conclusion & Stock Valuations

Exactly how popular WhatsApp share buttons will get remains to be seen. But clearly Facebook’s line-up looks quite formidable with Instagram, Whatsapp and of course, Facebook itself.

As for the stock valuations, we think Twitter is very expensive at its current valuations, especially given that user growth concerns still prevail. Among the flock of social media stocks, Facebook stood out in our Facebook, LinkedIn, Twitter valuation comparison.

Twitter and Facebook currently trade at Price to Sales ratios of 32 and 20 respectively. With close to 5 times Twitter’s user base, 10 times its revenue, a healthy growth rate of 60% YoY (Q2 2014) and profit margins in the 20s, Facebook is not just cheaper but also much more attractive. A comparison of our Twitter stock analysis and Facebook stock analysis further illustrates why we’re bearish on Twitter and bullish on Facebook.

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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