11 August 2014

Why Facebook still trumps Twitter

Social media giants Facebook and Twitter released second quarter earnings earlier this month; here are some key figures that investors will be looking at.
​​​​​​​​​​​​​Earnings season is well underway and this month saw two of the biggest hitters release their reports to markets; Facebook and Twitter.
 
First up was Facebook, which just two years after its IPO is now firing on all cylinders and has beaten even the most optimistic forecasts. It is now one of a handful of S&P 500 companies growing at more than 20 percent a year.
 

Twitter followed with some expectation-busting figures of its own. "Our strong financial and operating results for the second quarter show the continued momentum of our business," said CEO Dick Costolo,

But it’s still Facebook that shades it. Let’s take a look at the key data points.


Two years after its IPO, Facebook is firing on all cylinders and has beaten even the most optimistic forecasts. Photo: Shutterstock

EPS

Earnings per share (EPS) for Facebook came in at 0.42 in Q2 versus 0.32 for its last earnings release. 

Compare that with Twitter, which posted a meagre 0.02 EPS. Small in comparison with Facebook it was nevertheless a huge improvement on the negative 0.12 in the prior year period.

ARPU

Average revenue per user (ARPU) for Facebook climbed $2.24, up from $2 in the previous quarter as the number of daily active users soared 39 percent to 829 million worldwide. Monthly users rose 14 percent to 1.32 billion. Revenues for the quarter climbed to $2.91 billion.

Twitter saw revenue for the second quarter of 2014 rise to $312 million, an increase of 124 percent from a year before. Average monthly users climbed 24 percent to 271 million, meaning ARPU came in a little over a buck, half that of Facebook. 

Sales

Facebook continues to deliver strong sales growth, with advertising revenue up 67 percent to $2.68 billion compared to the same quarter last year. Twitter more than doubled it sales to $277 million.

Peter Garnry, head of Equity Strategy at Saxo Bank, was hugely impressed by the Facebook numbers. He says: “Based on the Q2 numbers we are confident that the model will maintain a very rosy outlook, and Facebook is likely to stay on the conviction buy list.





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The value of your investments can go down as well as up.
Losses can exceed deposits on margin products. Please ensure you understand the risks.