On Tuesday, Twitter released their Q1 earnings report. And you know what? It was pretty solid. Their EPS of $0.00 beat expectations by $0.03 and their quarterly revenue of $250 million, which is up 119% from this time last year I might add, beat the estimate of $241 million. But that didn’t stop the stock from hitting an all-time low, tumbling 11.24% down to $37.83.
So what gives? The more and more I’ve covered Twitter, the more and more I realize what their true problem is, and it’s something they’re never going to find a solution to: they aren’t Facebook.
The biggest reason for lack of investor confidence is their active user growth. The company saw its average monthly active users (MAUs) grow 25% year to year, to reach 255 million. That is slower growth than it saw in the previous quarter, when MAUs went up by 30% year to year. Analysts had been expecting MAUs to hit 257 million.
Mobile MAUs increased 31% to 198 million, once again falling short of last quarter, which saw growth of 37%. Mobile MAUs represented 78% of the company's total MAUs, up from 76% last quarter.
Facebook, on the other hand, only grew their monthly active user base by 15% this quarter, but with a user base of 1.28 billion, that 15% stands for a lot more new users than Twitter’s 25%. So while investors are falling head over heels for Facebook (with a caveat, of course), Twitter is like the black sheep of the family.
Don’t get me wrong, I believe that Twitter has long been overvalued on the market. It surprised me when investors pushed it to its all-time high of $74.73. I mean, did anyone really believe it was worth that? So yes, let’s bring the stock down to where it actually should be valued, but let’s stop comparing Twitter to Facebook, Instagram, Whatsapp or whatever else you want to use to make Twitter look like the kid in the corner eating glue.
In the end, Facebook and Twitter aren’t like Coke and Pepsi. It’s not simply a matter of preference. They are built on completely different platforms, and while you can do a lot of similar things on both, each has its strengths that the other simply can’t duplicate. The sad thing is that investors are, in a way, forcing Twitter to become more like Facebook. We can see examples of that in their recent layout changes and their efforts to push photo sharing.
In the end, if things continue like they are, Twitter is going to end up with an identity crisis and investors are simply going to lose more interest. So what I propose is this: Be realistic. Their stock price may have more room to fall before it’s finally where it should be, but we don’t need to gut the company because it’s doomed to forever be Facebook’s little brother. They just made a ton of changes and last quarter’s growth probably doesn’t reflect that quite yet. Allow these things to take time. And most importantly, stop talking about Facebook in every article that’s supposed to be about Twitter. We get it. Facebook is better. They’re stronger. They make more money. That’s not even an argument. But Twitter will never become the company they’re trying to be unless they’re allowed to be Twitter.