September 10, 2015

What Marketers Can Learn From Facebook and Twitter’s Stock Prices

By Andrew Minucci

For better or for worse, the stock market has been a hot news item throughout the recent month-long “roller coaster” trading period. While stocks are a mystery to many, the internal workings and decisions of individual corporations, used by investors to make buy and sell decisions, can offer some important information to social media marketers.

In this post we will take a look at Facebook and Twitter’s respective stocks and the reasons for their current valuations.

Facebook (NASDAQ: FB)

Facebook stock got off to a rocky start when trading was delayed to 11 a.m. on it’s first day due to a technical glitch. The stock opened at an initial public offering (IPO) price of $38. After a very shaky start, Facebook has become quite the blue chip stock, reaching a high of $99.24 in July, and trading at $88.15 as of this month.

Let’s take a look at what investors are looking at for Facebook:

  • Nothing quite wets the whistle of social media stock investors quite like growth. On Aug. 27, Facebook made the announcement that over one billion people used the network in a single day. According to Mark Zuckerberg, that is one in every seven people on Earth! With Facebook’s advanced targeting capabilities, this should be great news for marketers as nearly anyone is reachable through the network.
  • In July, Facebook announced that over 1.49 billion people are active monthly users of the network. That is more people than live in the United States! Despite talk of younger users flocking away from Facebook to networks like Snapchat, the truth is that Facebook shows no signs of slowing down (even after eleven years in business).
  • While Facebook is one of the world’s most valuable businesses, it also owns the second largest social media network, Instagram. As Facebook growth reaches high numbers, Instagram continues to grow at an even faster pace, which includes a younger audience. With the recent increased access to Instagram ads, marketers have a whole new platform to share their content, and Facebook has a huge new revenue stream to add to its coffer.
  • The current stock market decline is largely due to less than stellar manufacturing numbers and economic growth coming from China. Facebook has been largely unaffected by this downturn because the company does more than half of its business in the United States. Facebook offers marketers one of the most robust advertising platforms in the United States and is an increasing force worldwide.

Facebook stock has seen excellent growth in 2015 as the network continues to expand and generate increased advertising dollars. Facebook stock has seen excellent growth in 2015 as the network continues to expand and generate increased advertising dollars.

Twitter (NYSE: TWTR)

Anyone who owns a piece of Twitter stock likely looks at his portfolio with a tear in his eye. Twitter stock has dropped from a high of $70 in December, to the current trading price of $28.30. While this is terrible news for investors, there are some key lessons for marketers.

  • A major reason for Twitter’s stock decrease is simply awful growth numbers. From Q1 to Q2 in 2015, Twitter reported a growth of only two million new monthly-active users (MAU). With a total reported MAU count of 304 million, the company is lagging far behind Facebook. If your brand has a pile of cash to spend on a campaign, are you going to spend it on Facebook with 1.49 billion MAU or Twitter with 304 million?
  • To make matters worse, while many people use Twitter at least once per month, only 139 million users (44 percent of the total MAU) used Twitter daily. That means your hard earned advertising dollars are being spent on a network where the daily user count is less than half of the total fan base. If your ad runs on the wrong day, your target market may not see it.
  • Twitter has reported that over one billion usersyeah, with a Bthat signed up for an account have now left the platform. Features like the instant timeline, improved trending topics and search features designed to keep users engaged have clearly failed. Marketers and investors both seem to believe they have a better time engaging their audience on Facebook than Twitter.

Twitter stock has tanked since April as the company has reported less than stellar growth numbers and remains without a CEO. Twitter stock has tanked since April as the company has reported less than stellar growth numbers and remains without a CEO.

The immediate future for Twitter’s value seems pretty bleak. However, the situation is not hopeless as the company is setting itself up for a 2016 rebound. Rather than moving quickly to fill its vacant CEO spot to appease investors, the network has patiently and diligently searched for a new leader. Ecommerce opportunities, increased video capabilities and a more robust advertising platform are all slowly trickling into the network, causing some hope. However, currently marketers and investors alike believe their cash is in better hands with the market leader, Facebook.

Related Posts:

Tags: Facebook, Twitter

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