After reporting weak ad sales, Twitter (NYSE:TWTR) stock headed higher last week while Snap’s (NYSE:SNAP) earnings report sent shares lower. Twitter lost $1.56 a share as revenue plunged 18.7% Y/Y to $683.44 million.
Monetizable daily active users (mDAU) rose 34% Y/Y to 186 million, beating the 172.8-million consensus. Digging into the details, the site’s support for the rights group who bring no revenue to Twitter is not sustainable. If the audience grows, the advertisers will not want to advertise to users who are unlikely to respond to the ad.
Twitter’s stock-based compensation is an eye-opener. It rose 40% Y/Y to $130 million, taking 19% of total revenue compared to 12% last quarter.
For now, investors may bet on a growing user base as a sign the platform is gaining in popularity. Eventually, the advertisers will look at increasing spend if this site usage continues. Conversely, value investors seeking profitably run firms will want to look elsewhere. Facebook (NASDAQ:FB) and Google (NASDAQ:GOOGL) are more profitable than Twitter.
Snap is somewhat attractive after it dipped last week. It posted Q2 results that beat consensus but user growth disappointed investors. But
Snap competes with TikTok and that video-sharing site is growing exceptionally well.
If users grow tired of Twitter, too, and migrate to TikTok, then Twitter is at risk of trending lower again.
Tech Insider
