-Facebook was the last big tech stock to go public
-They are both part of the new “social web”
-The both had many question regarding their profitability
Comparisons Stop ThereYes, the Twitter IPO has certainly gone much smoother. There were no technical glitches, the stock had that expected IPO bump (from a $26 IPO to trading above $40), etc. It has been a smoother ride and in a way, Twitter did indeed avoid many of the mistakes made by Zuckerberg & Co. Where does Twitter now stand? The company is currently valued at $23B or so (20% of Facebook’s value).
What does Twitter currently have to show? It recently doubled its annual revenues to $534M (about 10% of Facebook’s).
So basically, you end up paying twice as much in terms of value/revenues. It gets worse though. In terms of earnings per share, Facebook was profitable a few years before going public. For Twitter? Analysts expect Twitter to have a profitable quarter for the first time in Q4 2014!! Analysts expect a profit of $0.01/share for Twitter then compared with a $0.34 profit for Facebook (34x less).
One of the main arguments is that Twitter is going public at a much earlier stage than Facebook. I’d agree with that. But I do still think the upside for Facebook remains much higher as it can go well beyond advertising. It’s also possible for Twitter but certainly not as obvious. Do I expect Twitter to grow revenues faster than Facebook? Yes maybe for 1-2 years. But I can’t imagine that trend keeping up.