Better Buy for 2022: Meta vs. Twitter

NASDAQ: FB | Meta Platforms Inc. News, Ratings, and Charts

FB – In today’s article, I will analyze and compare Meta (FB) and Twitter (TWTR) to determine which social media stock is currently a better investment.

Social media companies such as Meta (FB) and Twitter (TWTR) remain popular among investors and for good reason. These entities have become a household name as they generate consistent profits, grow top-line at a stellar pace, and enjoy high-profit margins.

Social media platforms generate a majority of sales via ad revenue and this trend is likely to continue in the future. In fact, the shift towards digital continues to gain pace globally, allowing Meta and Twitter to benefit from secular tailwinds.

Keeping these factors in mind, let’s see which of these two stocks, FB and TWTR, is currently a better investment in Q2 of 2022.

Meta

One of the world’s largest companies by market cap, Meta is valued at $606 billion. Formerly known as Facebook, Meta stock is now down 40% from all-time highs as Wall Street was concerned over Apple’s privacy changes which would impact ad sales in the future. Additionally, the ongoing sell-off surrounding growth stocks dragged Meta lower in Q1 of 2022.

Meta is the world’s largest social media platform with a monthly active user base of 3.6 billion, an increase of 9% year over year. Its sales were up 37% at $118 billion and net income soared by 35% to $39.4 billion in 2021. Its free cash flow also rose by 67% to $38.4 billion last year.

While Meta’s revenue growth will decelerate, analysts expect sales to rise by 12% to $132.2 billion in 2022 and by 17% to $155 billion in 2023. Comparatively, its adjusted earnings are forecast to expand at an annual rate of 18.5% in the next five years.

In 2021, Meta plowed in $10.2 billion on Reality Labs which is its metaverse business. While this number spooked investors, Meta has enough liquidity to spend money on the next big thing for social media.

Twitter

Twitter shares rose by 25% in a single trading session on Monday after it was revealed Elon Musk owns a 9.3% stake in the company. Despite the recent uptick, Twitter shares are still down 38% from all-time highs.

In Q4 of 2021, Twitter increased revenue by 22% year over year. The growth was attributed to ongoing product improvements, strong demand from advertisers, and strong execution by its sales team.

Twitter stock has underperformed the broader markets since going public in 2013. It initially aimed to touch 400 million MAUs or monthly active users by the end of 2013 but missed the target by a huge margin. The company then replaced its MAU metric with monetizable daily active users to exclude inactive and spam accounts.

In 2021, Twitter’s mDAU’s rose 13% to 217 million. It expects mDAUs to touch 315 million by 2023 which is an annual growth rate of 20% in each of the next two years.

Analysts expect Twitter to increase sales by 18% to $5.87 billion in 2022 and by 22% to $7.32 billion in 2023. Comparatively, earnings are estimated to rise at an annual rate of 80% in the next five years.

The verdict

We can see that FB stock is valued at a forward price to 2022 sales multiple of 4.6x and a price to earnings ratio of 18x which is quite reasonable. Comparatively, Twitter is trading at 6.4x forward sales and a price-to-earnings multiple of 60x.

Further, FB stock is trading at a discount of almost 50% while Twitter is trading at a premium of 10% compared to consensus price target estimates. I believe its lower valuation and greater upside potential make FB stock a better buy today.

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


FB shares were trading at $223.14 per share on Friday morning, up $0.19 (+0.09%). Year-to-date, FB has declined -33.66%, versus a -5.50% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditya Raghunath


Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
FBGet RatingGet RatingGet Rating
TWTRGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Investors in “Wait and See” Mode

Have you noticed that the S&P 500 (SPY) has been trading in a tight trading range of only 6,000 to 6,100 the past few weeks? Steve Reitmeister shares why this is happening along with a game plan for being on the right side of the market action. Read on for the full story...

3 High-Growth SaaS Companies to Watch

The SAAS industry is positioned for continued expansion, owing to the continuous advancements in AI and cloud computing, along with surging global demand. Thus, it could be wise to add high-growth SaaS stocks Twilio (TWLO), Informatica (INFA), and DocuSign (DOCU) to your watchlists. Continue reading…

3 Used Car Stocks Benefiting from High Auto Prices

As rising costs push more buyers toward affordable alternatives, the used car market is seeing strong momentum. Given this backdrop, we think it could be wise to scoop up the shares of fundamentally sound used car stocks Carvana Co. (CVNA), CarGurus, Inc. (CARG), and Cars.com Inc. (CARS). Read more…

3 Airline Stocks Ready for Takeoff as Travel Demand Soars

Global travel is rising, and airline stocks are primed for a major rally. Therefore, to capitalize on this compelling opportunity, investors could consider adding three solid airline stocks, American Airlines Group (AAL), SkyWest (SKYW), and United Airlines Holdings (UAL), to their portfolios. Read more…

Stock Market Alert: History Repeating Itself?

The last time we played around with tariffs was back in 2018 when we started a trade war with China. To say the least that was very negative for stocks as the S&P 500 (SPY) tanked the second half of the year. We need to learn from those history lessons to chart our course for investing in 2025. Read on for more...

Read More Stories

More Meta Platforms Inc. (FB) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All FB News