Friday, February 7, 2014

Will Twitter ever challenge Facebook?

Twitter released its earnings call on the 4th of February and its market capitalization has fell about 25% from about $36 billion to $27 billion in an occurrence that showed investors were losing faith rapidly in the second largest social network.

Despite Twitter having never turned in profit as a company, it had a very successful IPO – a luxury Facebook didn’t enjoy – because investors thought its revenue from mobile devices would lay a strong foundation for the company in future that is moving towards mobile.
Dick Costolo has never made profit for Twitter
Dick Costolo has never made profit for Twitter. Image: Reuters
Twitter’s stock however took a big hit after it was revealed that the social media site gained only 9 million users in the last quarter of 2013 and had a monthly user count of 241 million. Timeline view also reduced compared to the previous quarter.
It is not all doom as Twitter exceeded analysts’ forecast of $217.82 million by making $242.7 million in the last quarter, a 116% increase from $112 million in the same quarter in 2012. The main beacon of positivity for the social media site is its high revenue from mobile and it made 75% of its revenue from mobile devices.
Despite this Twitter made a net loss of $511 million in the last quarter of 2013 and $645 million in the whole year.
Twitter has always been thought of as the social media network that will take on Facebook for a bigger share in the social media industry. One thing analysts have thought could be a problem for Twitter was if it failed in its IPO.
However, Twitter passed the IPO test in flying colours but it is still a very long way from challenging Facebook at the top of the social media league. In fact, that would probably be the least worry of CEO Dick Costolo right now.
Dick admitted at the earnings call that twitter is difficult to use for new users. “We are doubling down in 2014 to accelerate growth of our core user base,” he said.
Meanwhile, Facebook has sailed through its stormy IPO and is now cruising at high speed in the social media industry, as well as the company’s market capitalization.
Despite the concerns that Facebook may be unable to exploit its mobile traffic, the company has assured investors by gaining more than half of its revenue from mobile in the last quarter.
Despite concerns that teens were having a mass exodus from the mega social site; it has continued to increase its user base, even more than the sites where the teens are supposedly flocking to.
Facebook revealed at its tenth birthday that it now has 1.223 billion monthly active users which is about 5 times of what twitter has. Wait, isn’t Facebook running too fast for other social networks?
Facebook also continues to see its market capitalization increase by the day as the company is now worth $164 billion (at the time of writing this post), $3 billion away from software giant Oracle.
Will Twitter ever challenge Facebook at the top of the social media league? Or will it even have to fight for its second place with social media sites like LinkedIn, Pinterest or Instagram? If Twitter will ever challenge Facebook, when will it be?
All these questions are very difficult to answer, I guess time will tell but one thing is sure, twitter has e very long way to go if it will ever come close to Facebook’s achievement at its tenth birthday in two years’ time.


  1. I think it's not necessary to compare with twitter and facebook, because twitter is just a short messaging service...while facebook have a complete social media solution! :)

    1. They're both social media services. That fact that they offer their services in different ways doesn't mean there can't be comparisons


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