Facebook Vs Twitter: How They Compare (Video)

  • Facebook and Twitter valuations have corrected post their Q3 earnings.
  • Facebook is well ahead of Twitter on nearly all fronts.
  • Twitter valuations indicate a 14% downside potential.

The last fortnight hasn’t been a particularly memorable time for social media's big names, Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR). Twitter Q3 earnings came out on 27 October 2014, and Facebook Q3 earnings were released a day after, on 28 October. Both of their earnings releases were met with corrections in the stock price. While Facebook fell over 8% in the two sessions that followed, Twitter has continued to fall, and is down by over 18% since the earnings release. As a result of this fall in stock price, both Twitter and Facebook valuations have improved from their pre-earnings levels. While both stocks don’t fall into our list of stocks to buy, we find Facebook to be much more attractive in  the social media space.

Twitter vs Facebook User Growth

Facebook ended Q3 with close to 5 times the Twitter user base. In spite of the huge user base, Facebook added about 30 million users during the quarter, while Twitter added 13 million users.

Twitter mobile MAUs (Monthly Active Users) were 80% of its total MAUs, as against Facebook’s 83%.

Monthly Active Users (MAUs) – millions






Q3 MAUs Added



Q3 Mobile MAUs



Here again, be it user base, user addition or reach on mobile, Facebook is undoubtedly the stronger of the two. Twitter user growth has been an ongoing source of concern since recent user growth has raised concerns about the scalability of the platform. Facebook’s Whatsapp is also a growing source of competition for Twitter.

Facebook vs Twitter User Monetization

In Q3, Facebook and Twitter revenue per user (MAU) came in at $2.4 and $1.3 respectively, tilting the scales in favor of Facebook yet again.

However, Twitter’s monetization on mobile has been one its strengths, with mobile ad-revenue accounting for 85% of ad-revenue vs Facebook’s 66%.

Twitter vs Facebook Revenue Growth & Profitability

Twitter averages a Year on Year growth of about 118% over the last 4 quarters. Facebook, on the other hand averages about 64%. So, is Twitter growing faster? Not really. In terms of growth rate, Twitter is growing faster than Facebook, but in terms of absolute revenue growth, that’s not the case.

Over the last 4 quarters, on an average, Facebook revenue has increased by $296 million every quarter. In contrast, on an average, Twitter revenue has grown by $48 million every quarter. Note that Facebook revenue is close to 10 times Twitter’s revenue. In spite of the huge revenue base, Facebook’s incremental revenue addition is stronger than that of Twitter’s.

Twitter vs Facebook revenue
Source: Twitter vs Facebook revenue chart by Amigobulls

Facebook net profit margins have averaged about 25% over the last year as against Twitter’s net loss margin of 83%. Clearly when it comes to revenue and profitability, Facebook scores more points on both fronts.

Twitter Valuations vs Facebook Valuations

Twitter currently trades at a Price to Sales ratio of 21.9 vs Facebook’s 18.8. In our Twitter stock analysis, we find no reason for the stock to trade at its current valuations. However, given that Facebook is currently more attractive on nearly all fronts, it’s safe to value Twitter based on Facebook’s Price to Sales ratio.

Such a valuation indicates that Twitter should be trading at no more than $34 a share, translating to a further downside potential of 14%. However, if you consider that Twitter doesn’t earn any profits and the concerns around the scalability of the platform, the stock should probably trade much lower than that as well.

Our Facebook stock analysis covers more Fundamental aspects of the company’s business. Statista has a Twitter and Facebook comparison based on Q2 numbers, which you might still find interesting. Based on our analysis, we assign Twitter a sell rating at its current valuations.

Vikram Nagarkar Vikram Nagarkar   on Amigobulls :

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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