There’s a great story in the Wall Street Journal today about the big opportunity Twitter Inc (TWTR) has in online video. Specifically, digital video ad spending is expected to shoot about 30% higher this year to $9.8 billion in the U.S. You’d expect this to be a major plus for TWTR stock, as the company expands its offerings to advertisers.
Instead, Facebook Inc (FB), Alphabet Inc (GOOG, GOOGL) and even Snapchat are stealing Twitter’s thunder, offering up video advertising spots to deep-pocketed advertisers at a moment’s notice.
It’s not that Twitter doesn’t support video advertisements — it does. But advertisers don’t just want to advertise, they want to target a specific audience and measure the efficiency of their spend. This is where things start to become ominous for the TWTR stock owner.
TWTR Stock: Better Bang for Your Buck in FB
One part of the Journal‘s story absolutely shocked me. TWTR,
“…said advertisers are waiting for Twitter to roll out improved tools to target users and measure performance. Twitter expects to release those tools in the fall, around the time it will begin live-streaming the first of 10 National Football League games.”
IN THE FALL? Are you kidding me? You are a massive tech company in 2016 that rose to prominence as a result of your platform’s fast-moving, as-it-happens, news-breaking ability. When I watched the NFL draft this weekend, I found out on Twitter who the next pick was before anyone even announced it on TV.
So, it seems painfully ironic to me that TWTR is so painfully slow when it comes to giving advertisers — Twitter’s lifeblood — what they need to serve ads effectively and measure advertising performance.
Knowing this, it makes last week’s stock market action — in which TWTR stock plunged and FB stock soared on horrible and excellent quarterly results, respectively — make all the more sense.
Twitter’s own commentary on why it whiffed on revenue forecasts (“slower than expected growth in brand advertising spend”) makes a lot of sense in this respect. If you truly think that video advertising is going to be the next big growth engine for your company, as Twitter allegedly does, you need to catch up with FB, YouTube, Instagram and Snapchat today … not in the fall. Is this a joke?
Sadly, no. And that’s why Facebook stock is still a dramatically better investment than Twitter stock.
FB Is Fundamentally Better Than TWTR
Facebook’s early, now-rejected-as-being-too-racy motto — “Move fast and break things” — I find to be elegant and dare I say somewhat beautiful, in the same way some of the world’s most important mathematical equations are beautiful for their simplicity.
Despite its user base being more than five times the size of Twitter’s, FB grew its MAUs by 15% last quarter, also five times the rate of TWTR. It also grew revenue by 52% to Twitter’s 36%, despite the fact that Facebook is a much larger company.
If TWTR would take Facebook’s mantra to heart, perhaps it could stop the decelerating revenue growth that has plagued the company for years. It’s inexcusable for pretty fundamental tools for advertisers to be delayed for so long, and such shenanigans would never stand at Facebook.
It’s time for Twitter to step up its game, or find itself increasingly irrelevant on Wall Street.
As of this writing, John Divine had no position in any of the aforementioned securities. You can follow him on Twitter at@divinebizkid or email him at editor@investorplace.com.
