Twitter Inc (NYSE:TWTR) is evolving its platform and user base to grow over the another decade. The company recently removed Fleets and discontinued Periscope while moving its Spaces to be more prominent in test markets.
It’s a sign that the company is no longer competing with the ephemeral nature of Snap Inc’s (NYSE:SNAP) Snapchat and is more focused on Clubhouse.
But which is best: Twitter stock vs Snapchat?
Snapchat fell out of fashion with celebrities and influencers like Rihanna and Marques Brownlee after faux pas like setting a distinct boundary between creators and common people. Twitter had a five-year head start over Snapchat which allowed it to partner with mainstream media TV as well as online outlets.
Certainly, it has failed to monetize and attract the investments of Snap, which seems a more likely candidate to materially challenge Facebook.
Snapchat Has Courted Controversy and Won
Myspace and Facebook kicked off a push to social media, but people quickly learned that what you put on the internet stays on the internet forever. It triggered a need for temporary messaging, which is exactly what put Snapchat on the map.
The social platform made its name for its ephemeral nature – you get notifications if anyone screenshots or records your content.
Of course, it also got embroiled in a lot of controversy, including CEO Evan Spiegel’s remarks on India in 2017. By February 2018, MKBHD, Kylie Jenner, Chrissy Teigen and others publicly abandoned the platform, shaving $1.3 billion off Snap’s stock price.
The stock dropped another $800 million only a month later over Rihanna’s criticism over a tone-deaf ad asking users to either slap the pop star or punch Chris Brown. It’s a tasteless reference to a highly publicized 2009 assault committed by Brown on Rihanna.
On top of this, its 2017 Spectacles launch cost the company $40 million in unsold inventory by year end. It’s these issues that caused the company to lose buzz even as it continued growing its user base and expanding into the metaverse.
Snapchat By The Numbers
Snapchat currently has about 300 million daily active users, over 200 million of which use augmented reality features. Over 75 percent of Americans between 13 and 34 years old use the app, and the average person opens the app 30 times a day.
By the second quarter of 2021, the company reported a 116 percent year-over-year revenue increase at $982 million. This is based on average revenue per user of $3.35 and shows how far the company improved over the past five years.
Annual revenue held below $1 billion until 2018, but 2020’s revenue of $2.50 billion was its most successful year ever. It’s already on track to increase another 60 percent this quarter, which shows strong year-end results.
The company still hasn’t reported a profit, which may be a problem for short-term investors. It’s also trading at a premium, potentially limiting gains over the next five years below the company’s actual growth.
What Is The Metaverse?
Snap considers itself a camera company reinventing the way we use them in our everyday lives. It has investments in Snap Originals and has a lineup of entertaining shows on the way, but we’re still a long way from these having the mainstream relevance of TikTok or YouTube.
The company is leveraging its existing users and their content archives while partnering with YouTube, Disney (DIS), Bumble (BMBL), and others to integrate and expand features.
The company understands the popularity of its Bitmojis and is pushing to seamlessly integrate 3D animation and effects into reality. This is creating a new level of art that merges our real lives with digital in ways that are leaking into both worlds.
It’s the metaverse even Facebook’s Mark Zuckerberg is chasing, and Twitter has its own roadmap for it.
Is Twitter Stock A Buy?
Twitter is struggling to maintain a $50 billion valuation as co-founder and CEO Jack Dorsey focuses on refining its features. The company bought short-form video service Vine to compete with TikTok in 2012, but it shuttered it in 2017. Periscope lasted a little longer but was shut down in early 2021, only months before killing Twitter’s Fleets feature.
Instead, it’s focused on making Twitter Spaces its flagship product to gain the monetization options it so desperately needs. The microblogging service has been free for so long that it’s unlikely anyone will pay for access without the company bringing premium features worth paying for.
The pandemic did help it grow, with Q2 2021 revenue of $1.190 billion handily beating the same period of the prior year by 74 percent. It has 206 million monetizable DAUs on average, and continues to grow ad revenue.
Is it enough to finally grow this dark horse social platform over $100 billion or even to $1 trillion?
Twitter Share Price Forecast
Analysts believe Twitter is undervalued.
The average price target of $74.50 is fair until the company proves its ability to continue growing monetization options.
The company’s biggest revenue sources are advertising and data licensing. In 2020, advertising services generated about 86 percent of the company’s total annual revenue at $3.2 billion. That’s a 7.1 percent increase from the prior year, and it’s continuing to grow in 2021 as the company focuses on Spaces.
What Is Twitter Spaces?
Spaces is Twitter’s answer to Clubhouse Drop-In Audio, and it has already pulled in major partnerships with the NFL and a vague possibility of Tidal mentioned in Dorsey’s June Space with Jay-Z. A lot of heavy-hitting companies created an audio app in 2021 to compete with Clubhouse, including Spotify (SPOT) Greenroom, Facebook Live Audio Rooms, and Mark Cuban’s Fireside chat app.
Unlike the others, Twitter Spaces is run by mental health professionals looking at the platform almost like a clinical trial. It’s adding voice and picture manipulation features and looking to partner brands with audio creators to create ticketed shows. It also enabled creator tipping to open another lane of P2P monetization it can take a cut from.
These features (if they pan out) could be enough to carry the company to the growth potential it failed to meet so far.
Twitter Stock Vs Snapchat: The Bottom Line
Twitter and Snapchat no longer look like competitors – they’re taking two completely different paths. Snap is a visual platform bridging the gap between virtual and reality to integrate the metaverse into our everyday lives.
Meanwhile, Twitter is digging its heels into microblogging while adding an audio layer. It’s continuously adapting to meet advertiser needs, and its move into Spaces could be the death blow to Alpha Exploration’s drop-in audio experiment.
Both Twitter and Snap are underdogs in social media that proved their mettle in the pandemic. The next decade should signal big growth for both but Snapchat has arguably the greater opportunity to capture massive market capitalization.
#1 Stock For The Next 7 Days
When Financhill publishes its #1 stock, listen up. After all, the #1 stock is the cream of the crop, even when markets crash.
Financhill just revealed its top stock for investors right now... so there's no better time to claim your slice of the pie.
See The #1 Stock Now >>The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.