Two social media companies sit at the top of the pile. One has successfully monetized itself with excellent management and a great CEO. The other… well it kind of stinks.
Between buying Facebook (FB) stock or Twitter (TXTR) stock, it is clear that the long term value producer is Facebook. Twitter is beaten down for a reason. It has failed to monetize itself and is run a by an incompetent CEO, Jack Dorsey.
It seems that Dorsey’s biggest problem is that he frequently succumbs to the hubris that zenruption cites as the biggest killer of companies. On the other hand, Mark Zuckerberg has shown incredible and effective leadership that has kept Facebook on top. One need never worry about Facebook being another MySpace.
It isn't any wonder that Twitter is off a 52 week high of $53.49 a share and closed at $16.85 to end the week. In a week that saw a bounce across almost all stocks, Twitter went nowhere.
Twitter has never produced a profit and might never do so. How the platform will monetize itself is questionable. On the other hand, Twitter has seen tremendous exposure due the tweet storm Presidential candidate that is Donald Trump, but even Trump can't monetize everything his name gets associated with.
zenruption has seen some of its biggest success in having articles republished through Twitter, yet the platform barely registers at driving traffic when compared to Facebook.
A business spending as little as $5 dollars a day through Facebook can define its demographic focus and potentially reach thousands of eyes. Facebook represents a full 20 percent of time that it's 1.5 billion users spend on the Internet but still only accounts for about 10 percent of Internet ad revenue. While having solidly beaten expectations on last quarter's earnings, it still has tremendous room to grow and remains a growth stock at a price to earnings ratio of 86.
A great way to frame the dilemma Twitter faces, would be that the zenruption co-founder, Brian McKay, started using Twitter 5 weeks ago, has gained a bunch of followers and still has no clue how it works.
Twitter has one potential redemption, it is cheap. The potential for it to be taken over by competent management that knows how to make it profitable does exist. One would hope that in 10 years of existence, the platform would have found a way to make money by now. Apparently not.
For long term growth potential,my money is on Facebook. Another 15 percent growth this year would not be unreasonable.
Feature photo courtesy of Flickr, under Creative Commons Attribution-Noncommercial license
Lina Martinez has her degree in political science and is a frequent contributor to zenruption’s money and life sections. We think she is financial genius and should go get a finance degree. Currently, she is trying to organize a stock investing competition with the zenruption team. Everyone has politely declined. Losing isn't cool.