Twitter Inc (TWTR), Facebook Inc (FB): Why Twitter Needs to Do To Catch Up

Twitter Inc (NYSE:TWTR)’s down about 3.3% throughout about its one year since it has gone public. It now trades at a price close to $40.16 per share and many investors are displeased by the fact that the management team hasn’t figured out how to get more users on its website. Facebook Inc (NASDAQ:FB) had a similar setback, dropping almost 53%, but the company quickly regained momentum. CNBC tried to clear out if that’s also the case for Twitter Inc (NYSE:TWTR) and whether it can rise again, but until that point many are looking with a grim demeanor towards the social platform.

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“I’ve been pretty frustrated because the company has said, even going back to their IPO [Initial Public Offering], that they understood the problem, that they wanted to improve user engagement, make it easier to use the service. And here we are a year later and I don’t see the progress,” said Walter Price of Allianz Global Investors.

Twitter Inc (NYSE:TWTR) reported a 284 million Monthly Active Users (MAU) base, only 7 million more than what it posted in the financial results for the second quarter. Year over year the numbers aren’t that bright either as the company has only a 23% on the upside in terms of MAU growth. It’s big advantage is that Twitter Inc (NYSE:TWTR) doesn’t have to somehow direction the audience to its mobile app as Mobile MAU represent some 80% of their total.

Despite its revenues of $361 million that show an 114% increase, compared to last year’s third quarter, it  still makes some 9 times less than Facebook Inc (NASDAQ:FB)’s $3.2 billion revenues and also registered a loss of $175 million. Doing some improvised math, taking the coefficient of 9 from above and knowing that Twitter Inc (NYSE:TWTR)’s MAU is about 5 times smaller than Facebook Inc (NASDAQ:FB)’s 1.35 billion, we get that either the latter company manages to monetize better or it has more active users (the relationship is not linear and skewed in Mark Zuckerberg’s favor). Either way, there is a setback that doesn’t allow the blue birdie to fly, thus something must be changed.

“I don’t think it has to be a new CEO. The management team understands the problem. They just need to have development people that can help users get more engaged more quickly. Particularly, users that are readers not active and avid tweeters. There’s a huge audience out there that they need to figure out how to engage,” stated Walter Price.

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