Facebook Beats Twitter

There's a lot of money accumulating in Techlandia. The cash-rich companies are also starting to get itchy. With short-term income instruments yielding a pittance, it won't be long before they begin deploying some of that greenery into strategic acquisitions.

At the top of the list of privately held acquisition targets, you will probably find Facebook and Twitter. These are the two companies that everyone seems to be talking about these days, but which one is the better buy? Which company offers the brighter future and most bang for the buyout buck?

It has to be Facebook! My friend Tim Beyers disagrees, but what does he know? He's a Twitter fiend.

Face to face with Facebook
Tim and I know both sites well. We follow each other on Twitter. We're friends on Facebook. I just can't see how he feels that Twitter is a business.

For starters, Facebook is already a business. It supposedly cleared $280 million in revenue last year, and that is projected to grow by 70% this year. Twitter? Well, it's too busy trying to generate traffic to worry about actual monetization.

It will definitely happen for Twitter. However, it won't be without its risks. The moment it begins to launch premium accounts, a caste system will be born. Once it begins populating its site with ads -- like, for example, spitting an ad out for every tenth "tweet" -- it will open the door for ad-free rivals that promise to be less intrusive. We don't know how the Twitterati will react, because the company hasn't taken that step.

Facebook, thankfully, has already proven that it can thrive with a deluge of marketing opportunities. It landed a juicy advertising deal with Microsoft (Nasdaq: MSFT  ) two years ago, while Twitter was still in the crib.

Unlike Twitter -- which is essentially a one-trick pony -- Facebook is a malleable social experience. It's no wonder that it surpassed 200 million registered users last month. It wasn't the first social network. Sites like Friendster planted the flag. It's not even the first site with campus-driven roots. United Online's (Nasdaq: UNTD  ) Classmates.com was all over that, but fumbled the ball by positioning itself as a premium reunion site instead of the open platform for the masses that Facebook has become.

Facebook isn't just disruptive to rival social-networking sites.

  • It is attracting 850 million photo uploads a day, clearly eating into older photo-sharing sites like Shutterfly (Nasdaq: SFLY  ) .
  • It rolled out an app platform for developers, a year before Apple (Nasdaq: AAPL  ) opened its App Store, and now VentureBeat is reporting that a payment platform for developers is in the works.

The scary thing is that as big as Facebook has become in a few years, this is really only the beginning.

Twitter rhymes with quitter
I can spend hours on Facebook. I can spend minutes -- or even a minute -- on Twitter.

I joined Twitter 26 months ago, early enough to lock up a choice investing-related name: @market. Unfortunately, I just haven't caught the bug the way that my bud @milehighfool has. I have posted just 21 updates in that time, so I guess I'm averaging a little less than one a month. Maybe if I'm inspired, a link to this article will be my 22nd tweet.

Is it worth it? I have to go to a third-party URL-squeezing site like bit.ly or tinyurl.com to shorten the link. I have to keep my post under 140 characters. I have to put up with scrolling past the crossfire of replies where I'm only getting half the story.

Two months ago, I was at the final weekend of a Circuit City liquidation sale. The pickings were slim, but there were a ton of Sirius XM Radio (Nasdaq: SIRI  ) receivers that weren't selling -- even at just $7 apiece. I took a snapshot, and figured it would make a good Twitter entry. Well, it was even more of a hassle, since I had to go to Twitpic and upload it there, then deal with the copy shackles once again.

Blech! Twitter is like spinach. I'll eat it because it's good for me, but it doesn't mean that I have to like it.

Facebook is the one you want
It wouldn't surprise me to see both Facebook and Twitter either go public this year or be acquired at a healthy price. I'm not Twitter's biggest fan, but I definitely see its utility as both a promotional platform and a way to take cyberspace's pulse.

However, I like my sites the way I like my cinnamon rolls: sticky, warm, and worth rolling out.

Facebook fits the bill. It's the perfect catchall site. It is magnetically viral enough to become the most popular website in a few years. It is open-ended enough to carve out its own future. In a single snap, it can become a search engine like Google (Nasdaq: GOOG  ) , take the form of eBay's (Nasdaq: EBAY  ) entire bag of verbs, or become the content distributor that wipes the slate clean for major labels and perhaps even newspaper companies.

My final point -- before we both return on Monday with our rebuttals -- is that unless Tim can limit his bullish argument on Twitter to a mere 140 characters, I win.

Some cool widgets for your Facebook profile:

Google is a Motley Fool Rule Breakers recommendation. Apple and eBay are Motley Fool Stock Advisor recommendations. eBay and Microsoft are Motley Fool Inside Value recommendations. Try any of our Foolish newsletters today, free for 30 days

Longtime Fool contributor Rick Munarriz remembers when social networks were an offline endeavor. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (17)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 13, 2009, at 12:34 PM, Fredlee009 wrote:

    If your readers read my posts, they will know you are not bullish SiriusXM like you claim. If you were you would have known sub numbers would go down, and you would be focusing on self pay numbers, and their bottom line... All good.

    "Two months ago, I was at the final weekend of a Circuit City liquidation sale. The pickings were slim, but there were a ton of Sirius XM Radio (Nasdaq: SIRI) receivers that weren't selling -- even at just $7 apiece. I took a snapshot, and figured it would make a good Twitter entry. Well, it was even more of a hassle, since I had to go to Twitpic and upload it there, then deal with the copy shackles once again."

    You couldnt resist could you. Ive stated you cant go 1 week without mentioning Sirus, Im going on further... Ill bet you cant go two days. If you cant you look like an even bigger fool. Nice bash on your "bullish" call on Sirius by the way. Why dont you mention the sub loss again? Its been 24 hours after all...

    You WILL NEVER respond to my posts, because you have no clue about the company you report.

  • Report this Comment On May 13, 2009, at 12:36 PM, Fredlee009 wrote:

    "Two months ago, I was at the final weekend of a Circuit City liquidation sale. The pickings were slim, but there were a ton of Sirius XM Radio (Nasdaq: SIRI) receivers that weren't selling -- even at just $7 apiece. I took a snapshot, and figured it would make a good Twitter entry. Well, it was even more of a hassle, since I had to go to Twitpic and upload it there, then deal with the copy shackles once again."

    I told you you couldnt go 1 week without mentioning SiriusXM, ill go one further, ill get you cant go 2 days. And when you cant, your readers will know the fool you are. You wont respond to my posts, because you dont knwo what your talking about.

  • Report this Comment On May 13, 2009, at 7:02 PM, TMFBreakerRick wrote:

    Freedlee, I have responded, but you're not reading. As for the dare. I accept. 2 days.

    As for the "you would have knownn sub numbers would go down" I have to go back to your response to me from 5/1/09, when you said I was wrong to expect a decline in subs (and you predicted it would hold at 19.1 million):

    http://www.fool.com/investing/general/2009/05/01/4-dates-to-...

    And, finally, you challenged me to a forum debate. I accepted in that same post and linked to the discussion board to hear out one another:

    http://boards.fool.com/Message.asp?mid=27657647

    You never showed up.

  • Report this Comment On May 13, 2009, at 7:41 PM, Fredlee009 wrote:

    Thats you rick? is that you? ok, lets go debate. i didnt know it was you. Yes, i did write that, and I WAS WRONG. But since you EXPECTED IT, why do you find it a bearish view? You were BULLISH prior to knowing you thought the subs would decline. I was confused on how promo subs were added, but tyler has now cleared up the "parking lot sub" issuse, and where the real future loss in subs will come from, simple production line delays(do you mention this in your article that the sub loss was purely based on math, and not real customers cancelling after lets say 1 or 2 years etc.. 100k loss in self pay, in the worst financial envirnonment in our modern era...

    With Circuit city shutting down, with bk rumors,changing channels, and price additions...

    Wheres your bullish article about that? your bullish comments are always backhanded...

    Your shots are noticeable.

    Sorry for not realizing that was you posting, i sometimes miss mentions in comments..

    man if i knew that was you i would have went..

    ill go now...

    pick a time..

    ill be there...

    Well see if you can support your arguments against a real bull..

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 898269, ~/Articles/ArticleHandler.aspx, 10/24/2014 9:13:49 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement