Wednesday's hot stocks: AMD, KO, X >>> READ MORE

FB Vs. TWTR Stock: Was Q2 a Game-Changer for Twitter?

Twitter gave the pro-Facebook crowd something to mull with its second quarter results

    View All  

Costolo repeatedly explained his goal of making Twitter “the largest information network in the world.” More than that, it became clear he knows how to make it happen … something that hadn’t been clear before. Specifically, Costolo acknowledged the company’s best growth opportunity may well be the audience that doesn’t actively use Twitter, but has signed up as users and/or sees Twitter micro-blog entries on television or on partners’ websites.

It’s subtle on the surface, but it also marks a turning point for the company’s engagement woes.

Facebook is Blazing the Trail Twitter is Following

Be that as it may, one problem remains — Facebook is still the “go-to” social networking site, boasting more than four times Twitter’s user base, and hitting its own homerun last quarter on the sales and earnings front. It did particularly well with its mobile efforts; last quarter’s revenue grew by 61%, and mobile revenue grew by 151%. Indeed, the bulk of revenue for Facebook (62%, to be exact) now stems from mobile ads. Almost needless to say, the company has finally found a winning formula. Ads on newly-acquired texting platform Instagram should keep the top and bottom line growing for the foreseeable future.

And the Winner Is?

So has TWTR stock finally unseated FB stock as the name to own in social networking? While Facebook will continue to be the market share leader for years to come, Twitter shares appear to be in that proverbial sweet spot for a stock … the point in time where a company’s problems have been adequately addressed, and right when the business model in question has been validated.

For example, Facebook had its “aha” moment in mid-2013 when it realized mobile was the future and that it’s original advertising exchange platform wasn’t quite the right fit. Mark Zuckerberg made the adjustments, revenue soared beginning in the fourth quarter of that year, and FB stock has rallied 117% over the past twelve months as a result.

While TWTR stock may or may not dole out a similar triple-digit gain, it is fairly clear Twitter has turned the proverbial corner in terms of user engagement and revenue-generating capability. TWTR stock shouldn’t be too far behind, following in the footsteps of FB stock after Facebook turned the corner a year ago. It’s all a matter of timing.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

©2017 InvestorPlace Media, LLC