Facebook (FB) Twitter (TWTR) are the top two social media platforms. Facebook operates as a social networking company worldwide, enabling people to connect, share, discover, and communicate with each other on mobile devices and personal computers. The company was founded in 2004 and is based in Menlo Park, California. Twitter offers various products and services, including Twitter that allows users to create, distribute, and discover content; and Vine and video, a mobile application that enables users to create and distribute short looping videos. The company was founded in 2006 and is based in San Francisco, California.
Social media was already insanely popular prior to the COVID-19 pandemic. But the unprecedented global public health crisis turned up the volume over the last year. And the exponential rise in social media activity versus the prior year has sent most of the sector’s stocks on a journey skywards. However, most social media devotees limit their usage to the top two social media platforms, sparing nary a thought for the others. Furthermore, social media usage is segmented by age demographics, making it somewhat challenging to predict the prospects of these internet stocks.
Though FB has excelled in selling ad space and expanding its content horizons to diversify its revenue, TWTR is plodding along comparably slowly in terms of bolstering or diversifying its revenue streams.
Let’s look at these two social media stocks to determine which is the better investment pay now play.
FB is attempting to broaden its horizons and not on its laurels. Over the years, the company has purchased virtual reality technology, launched a marketplace, implemented Facebook Dating and now has its eye on even more features that it hopes will continue to broaden the company’s user base. Though there is the potential that the legislators could push for a breakup of the social media titan, it appears for not that that FB will not be in the crosshairs of the Biden administration.
FB is a Wall Street darling. Top analysts have established an average price target of $338.42 for the stock, representing a more than 30% appreciation above the stock’s current trading level. Analysts’ high target price for the stock is $418, with a target low of $220. Of the 50 analysts who cover FB, 27 recommend it as a Buy, 19 recommend it as a Strong Buy, and four view it as a Hold.
FB’s forward p/e ratio is 26.0x. Even if FB were to spike another $14 to hit a new 52-week high, its forward p/e ratio would still have prospective investors salivating. FB’s EPS is likely to expand by more than 20% on a yearly basis over the next five years.
FB excels in our POWR Ratings. It has a B overall grade, meaning it is a Buy. FB has an A grade for Quality and B grades for Momentum and Sentiment. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
Click here to find out more about how FB fares in the Value, Growth and Stability components of the POWR Ratings.
Of the 69 publicly traded companies in the Internet sector, FB is ranked 5th. Investors who would like to learn more about this sector can do so by clicking here.
TWTR now near ubiquitous in popular culture. Whether on smartphones, the web, television or the radio it is only a matter of time until tweets are referenced or seen or cited. And though TWTR’s have proven in some instances to be divisive or sometimes annoying, its very omnipresence makes it a solid investment.
However, TWTR does not feature as many ads as other social media platforms, though its management is currently revamping the company’s advertising strategy to display more ads tailored to users’ interests. TWTR’s brass is also planning to roll out paid subscriptions in which users can pay to read exclusive tweets by celebrities, athletes and other notable individuals. In other words, TWTR is gradually seeing to more aggressively monetized its platform. This progression is reflected in TWTR’s stock price, which has increased steadily over the past year.
But TWTR isn’t yet a POWR Ratings star. It has an overall POWR Ratings grade of C. But the stock has an A grade in the Growth component and a B grade for Momentum . Click here to find out how TWTR fares in the other POWR Ratings components. such as Value, Quality and Sentiment.
TWTR is ranked 27th of 69 stocks in the Internet segment. Click here to learn more about the companies in this space.
Top analysts have established an average target price of $45.85 for the stock, meaning it has -36.25% downside potential. They have accorded its stock a target high price of $65 and a target low price of $45.85. Indeed, TWTR seems overpriced at its current level as its forward p/e ratio is a whopping 73.84x
Our research shows that the odds of success increase if one bets on stocks with an Overall POWR Rating of Buy or Strong Buy. Click here to learn about the top-rated stocks in the Internet industry.
Unlike TWTR, FB isn’t a one-trick pony. FB appears to be interested in selling everything from virtual reality tech to dating connections, material items and more. Even if interest in the FB social media platform wanes in the years ahead, the company has diversified its value offerings enough to keep the money rolling in. Based on the factors we have discussed we think FB is the better bet now.
The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
FB shares fell $0.50 (-0.18%) in after-hours trading Friday. Year-to-date, FB has gained 3.61%, versus a 6.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|FB||Get Rating||Get Rating||Get Rating|
|TWTR||Get Rating||Get Rating||Get Rating|