Why Twitter's Great Quarter Doesn't Make It Facebook (Yet)
Credit: Scott Hampson, Flickr
Here's what's on my mind this morning as I get ready for CNBC's Squawk Alley at the NYSE:
Wow, Twitter.
A strong quarter that came in better than expected in just about every way has sent the real-time social media company's stock rocketing higher, as optimistic investors rejoice a and traders who bet against the stock rush to cover their losses.
The number of monthly active users came in at 271 million, up 16 million from the period before. Ad sales and profit rang in far higher than expected, and management said sales for the full year will now be nearly $100 million higher than they had promised.
So. Does this mean we have another Facebook on our hands? A stock that the crowd stopped believing in at exactly the wrong time, and that's set to post a string of revenue and profit beats?
We're not there yet. Twitter might indeed be very successful financially from here. But it turns out there's a key difference between Twitter and Facebook that suggests their paths won't be quite the same.
The difference is this: When many pundits lost faith in Facebook, their assumption was that kids were abandoning its mature, boring core desktop product for shinier mobile apps like Twitter, Snapchat and Instagram. The myth of the Fall of Facebook was one of demographic and mobile decline.
The knock on Twitter is very different. The majority of its business is already on mobile, but it's never really had critical mass, a tipping point where everybody had to be on it.
For Twitter, it's not a matter of proving that their smoothly functioning network is cool enough to make money in a mobile era. It's a matter of proving that a real-time communication platform is pedestrian enough that the masses will care to be on it when it's not World Cup or Oscars time.
For Facebook, silencing its critics was a simple matter of carefully rolling out mobile ads and watching the cash roll in even as young people stuck around. Despite the fantastic numbers this quarter, it's going to take a lot more than that for Twitter to prove its case.
Founder & CEO @ Prose - content marketing agency
9yThanks for this great analysis, Jon. Twitter isn't as ubiquitous as Facebook, but its unique business model offers some great opportunities for both companies and individuals to promote themselves and their business, while engaging with audiences all over the world. See "The Best Tweets of All Time: Our List of the Most Important, Record-Breaking Tweets Ever" (http://blog.prosemedia.com/the-best-tweets-of-all-time-our-list-of-the-most-important-record-breaking-tweets-ever/) on our blog for a sense of how useful Twitter can be, and some inspiration to get started.
Real Estate Agent at Self Employed
9yNo guarantee Twitter will ever be like Facebook but, I don't believe they want to be.
Strategy & Business Improvement Director - Kier Transportation
9yAgree Twitter provides a platform to promote your organisation and services positively to a large audience. Tweeting key message in 140 characters but getting your point across nonetheless :-)
Passed CFA Level 1
9yI believe tweeter and Facebook are not in the same strategic group and they are not competing in the same market segment. Since they don't have a common denominator comparing both (even in revenue terms) might be misleading.