Can Twitter Inc (TWTR) Be the Next Facebook Inc (FB)?

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The expectations with Twitter Inc (NASDAQ:TWTR) were huge when it came with its IPO, but the company is failing to stand up to the occasion and generate results that investors want from it. Facebook Inc (NASDAQ:FB) has demonstrated with its second quarter results that it’s now a force to reckon with and the Street is expecting Twitter Inc (NASDAQ:TWTR) to grow in the same way that Facebook Inc (NASDAQ:FB) has.

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So, can Twitter Inc (NASDAQ:TWTR) be the next Facebook Inc (NASDAQ:FB)? That was the topic for discussion between Dan Ernst, Research Analyst at Hudson Square and Jeff Clavier, Founder of SoftTech VC, on today’s edition of Bloomberg’s ‘Market Makers’.

“I like Twitter Inc (NASDAQ:TWTR). I am very involved in Twitter Inc (NASDAQ:TWTR), but I think, it’s a narrow caster. I don’t think it’s a mass market product. The other issue is, it’s not growing nearly as fast as Facebook Inc (NASDAQ:FB) was even at a similar point in time. It’s barely profitable whereas Facebook Inc (NASDAQ:FB) was wildly profitable at the same point in time at the same size versus…today. Then you layer on the valuation, we have slow growth, lack of profits and it’s trading at 132 times EBIDTA versus 22 for Facebook Inc (NASDAQ:FB)[…],” Ernst said.

Ernst believes that the biggest issue with Twitter Inc (NASDAQ:TWTR) is not Twitter Inc (NASDAQ:TWTR) itself but the market expectations for the company. He asked the participants to recall that the original pricing range suggested by bankers for Twitter Inc (NASDAQ:TWTR)’s IPO was between $17-20. According to Ernst the real question for Twitter Inc (NASDAQ:TWTR) is how it is going to monetize its services.

“They [Twitter Inc (NASDAQ:TWTR)] are smart and they have actually hired – I mean they fired a few people – they have hired a bunch of really smart people. I believe that the guys who are in charge of advertising products Adam Bain and Kevin Weil are really smart guys and they are really sort of rolling out new products that will eventually give to the advertisers, this kind of engagement and the reach that they want to actually buy on the platform […],” Clavier added.

Disclosure: None

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