Facebook surges as Twitter slumps

Shares of Facebook touched a record high on the back of overwhelmingly positive quarterly results, adding more than $27bn (€23bn) to its market value, but rival Twitter failed to attract more monthly users in the second quarter, spooking investors looking for evidence that the company is on a sustainable long-term growth path.

Facebook, the world’s biggest online social network, posted a 71% surge in second-quarter profit and a 50% jump in mobile ad sales, allaying investor concerns that ad revenue growth was peaking as it runs out of space to display ads. The shares rose 6%, adding gains worth twice the market capitalisation of Twitter.

Facebook’s ad sales growth did slow to 47% in the June quarter, after a 51% increase in the March quarter, but investors brushed it aside, looking ahead to new growth drivers — WhatsApp, Messenger and video.

At least 11 brokerages raised their price targets. Facebook has more than 2bn regular users. Its two messaging services, Messenger and WhatsApp, have more than 1bn users each.

Mobile advertising accounted for 87% of the $9.16bn (€7.85bn) in total ad revenue.

Twitter’s business troubles contrast with its increased profile in the political world, as US president Donald Trump frequently uses the platform to reach the public in an unfiltered manner.

Despite his daily fusillade of tweets, Mr Trump hasn’t helped Twitter’s growth in its home country. Monthly active users in the US, Twitter’s most important advertising market, declined to 68m from 70m in the prior quarter.

A long-term turnaround depends on Twitter expanding its audience. That number stands at 328m monthly active users — the same as in the prior quarter, the San Francisco-based company said. Revenue fell 4.7% and the company’s net loss also widened, affected by a $55m (€47.1m) write down of the value of its investment in SoundCloud, the German music streaming service.

The shares fell as much as 14%. Its net loss was $116.5m, as revenue dropped to $573.9m, though that beat analysts’ estimates, as the company drew more money from video advertising and its business selling data to third parties.

Twitter is still working to prove that it can build a sustainable, growing business.

After hitting a plateau with its user base and struggling with a slowdown in sales, the company started narrowing its focus, shuttering businesses and teams that didn’t fit its goal of being a destination for live-event content.

Bloomberg