Snap, Twitter two losing users, but shares are moving quickly in opposite directions

Social media companies Twitter Inc. (TWTR) and Snap Inc. (SNAP) both released their most recent quarterly results this week, sending the former's skyrocketing stocks and that of the former to new lows. Despite the lower number of users of technology companies based in Silicon Valley, both companies have managed to reduce their revenue per user. Investors, however, remain concerned about Snap's ability to rule out competition from Facebook Inc.'s (FB) Instagram platform and its lack of importance to digital advertisers. At the same time, Twitter, which faced increased regulatory pressure and criticism of fake accounts and offending accounts, took a breath of fresh air as the street applauded better than expected at higher numbers. and lower.

Snap Can not Shake Instagram Fears

Snap's profits after the market closed on Thursday showed a decline in the number of daily users larger than expected, while the company recorded a loss and lower-than-expected revenue, exceeding the consensus.

In advance of earnings, Bear on the Street said the third quarter report would be crucial for Snap, as it struggles to make an indispensable purchase for advertisers. The platform for sharing photos and videos has not left the experimental stage or validation of the concept of advertisers. It was therefore difficult for Snap to generate revenue generated by its millennial user base, many of which delete the mobile app and devote more time to Instagram, which copied many of Snap's initial features, such as "one-size-fits-all". 24-hour history.

Analysts such as Rich Greenfield of BTIG note that CEO Spiegel "must explain his views on the Facebook threat," since daily active users of Instagram Stories are now "considerably larger than Snapchat and that the time spent on your teenage / young adult main demo is now much more evenly divided than a year ago between Instagram and Snapchat, "said Bloomberg.

Snap is facing a handful of other challenges, threatening the retention of employees and executives. On Wednesday, Cheddar reported that, according to an internal survey of companies, 40% of Snap employees plan to leave the company, compared to just 11% earlier in 2018.

Down 11.2% Friday at 6.21 USD, Snap shares significantly underperformed the overall market, down 57.5% since the beginning of the year compared to the S & P 500 in 2018 and reflecting a decline of more than 63% compared to the price of its IPO of 17 USD in March 2017.

Trends in monetization on Twitter will decrease more than compensated

Twitter shares, on the other hand, experienced the largest increase eight months after the third quarter results. Dealer up 1.6% Friday afternoon at $ 32.31, the Twitter action reflects a 34.6% increase since the beginning of the decade.

The San Francisco-based company recorded a nearly 30% increase in its advertising revenue in the third quarter, its third consecutive quarter of double-digit growth.

To go forward, investors are optimistic about a strategic shift to adding more live video and personalized content. Twitter plans to continue to eliminate fake accounts on its platform, posing a threat to user statistics, which should already drop again in the fourth quarter, while easing criticism before the mid-term elections in November. Colin Sebastian, a Baird analyst, wrote a note following the report suggesting Twitter's monetization trends are sufficient for "more than offsetting" the decline in the number of monthly active users, as well as reported Bloomberg.

Overall, the bad news seems to be fully integrated into Twitter's actions, as the street is now less concerned about user numbers and more optimistic about financial statistics, user engagement and a better return on investment for advertisers, as the company doubles its investment in AI and machine learning.