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Snap vs. Twitter: Which Social Media Stock Is The Better Buy?
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For investors, the social media “industry” is quite interesting. It’s hard to be a “social media investor” because there simply aren’t that many options, but nevertheless, we seem to be talking about social media stocks all the time.
Earlier this year, the markets gained another publicly-traded social media company after the historic IPO of Snap Inc. (SNAP - Free Report) , the maker of popular picture messaging application Snapchat. The young company—led by the baby-faced billionaire, Evan Spiegel—raised more than $3 billion at a $24 billion valuation.
And while Snap promised to offer investors something new and exciting, it quickly became obvious that the stock would follow the same pattern that its industry peers did shortly after their IPOs. Indeed, Snap has proven to be volatile and easily susceptible to large one-day moves based on news and speculation.
Nevertheless, Snap remains a viable option in the social media space, and that means it is time to put the stock up against one of its possible rivals: Twitter .
Twitter is actually a great example of the frustration that can come from an internet company with lots of hype; despite its relevancy in our everyday lives, the stock has struggled over the past couple of years, and posting consistent user growth has proven to be difficult.
Nevertheless, Twitter is on a bit of a rebound, and now seems like the best time to put the stock head-to-head with Snap. One is the fresh young face, and the other hopes it has seen its worst days. Let’s jump into it:
As we can see right off the bat, neither one of these companies is blowing us away in our key Zacks metrics. Both stocks have a Zacks Rank #3 (Hold), mostly due to the lackluster earnings estimate revision activity we have seen for the companies.
It’s worth noting, however, that the above revision activity is for the current quarter. Looking at our full-year estimates, Twitter has a bit of an advantage. In fact, we’ve seen four positive revisions and just two negative revisions for Twitter’s full-year earnings within the past 30 days.
We also see that Twitter has the edge in our Style Scores system. Overall, its VGM grade of “B” has been lifted by its “A” grades for Growth and Momentum. On the other hand, Snap has a relatively weak VGM grade of “D,” and its best grade is a “B” for Momentum.
Of course, user growth remains one of the key factors for any social media company. And while it may seem like Snap’s 36% year-over-year user growth is a big win, it should be pointed out that the company said it added about 5 million users during the first quarter. Twitter actually outpaced that, adding about 9 million users in the first quarter.
Looking ahead, we can expect Snap and Twitter to begin competing more directly. While Twitter’s micro-blogging platform and Snapchat’s picture sharing system can certainly coexist, both companies look to be on the cusp of launching new original programming initiatives that might see the brands clash over entertainment supremacy.
In fact, this looks to be the overall trend throughout the social media market. We recently learned that Facebook is also looking to launch its own original content. For more on this, check out our recent episode of the Zacks Tech Talk Tuesday:
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
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Snap vs. Twitter: Which Social Media Stock Is The Better Buy?
For investors, the social media “industry” is quite interesting. It’s hard to be a “social media investor” because there simply aren’t that many options, but nevertheless, we seem to be talking about social media stocks all the time.
Earlier this year, the markets gained another publicly-traded social media company after the historic IPO of Snap Inc. (SNAP - Free Report) , the maker of popular picture messaging application Snapchat. The young company—led by the baby-faced billionaire, Evan Spiegel—raised more than $3 billion at a $24 billion valuation.
And while Snap promised to offer investors something new and exciting, it quickly became obvious that the stock would follow the same pattern that its industry peers did shortly after their IPOs. Indeed, Snap has proven to be volatile and easily susceptible to large one-day moves based on news and speculation.
Nevertheless, Snap remains a viable option in the social media space, and that means it is time to put the stock up against one of its possible rivals: Twitter .
Twitter is actually a great example of the frustration that can come from an internet company with lots of hype; despite its relevancy in our everyday lives, the stock has struggled over the past couple of years, and posting consistent user growth has proven to be difficult.
Nevertheless, Twitter is on a bit of a rebound, and now seems like the best time to put the stock head-to-head with Snap. One is the fresh young face, and the other hopes it has seen its worst days. Let’s jump into it:
As we can see right off the bat, neither one of these companies is blowing us away in our key Zacks metrics. Both stocks have a Zacks Rank #3 (Hold), mostly due to the lackluster earnings estimate revision activity we have seen for the companies.
It’s worth noting, however, that the above revision activity is for the current quarter. Looking at our full-year estimates, Twitter has a bit of an advantage. In fact, we’ve seen four positive revisions and just two negative revisions for Twitter’s full-year earnings within the past 30 days.
We also see that Twitter has the edge in our Style Scores system. Overall, its VGM grade of “B” has been lifted by its “A” grades for Growth and Momentum. On the other hand, Snap has a relatively weak VGM grade of “D,” and its best grade is a “B” for Momentum.
Of course, user growth remains one of the key factors for any social media company. And while it may seem like Snap’s 36% year-over-year user growth is a big win, it should be pointed out that the company said it added about 5 million users during the first quarter. Twitter actually outpaced that, adding about 9 million users in the first quarter.
Looking ahead, we can expect Snap and Twitter to begin competing more directly. While Twitter’s micro-blogging platform and Snapchat’s picture sharing system can certainly coexist, both companies look to be on the cusp of launching new original programming initiatives that might see the brands clash over entertainment supremacy.
In fact, this looks to be the overall trend throughout the social media market. We recently learned that Facebook is also looking to launch its own original content. For more on this, check out our recent episode of the Zacks Tech Talk Tuesday:
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Looking for Stocks with Skyrocketing Upside? Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>