Social-media stocks have been in the crosshairs over the past couple years, as privacy and safety concerns have investors rethinking the risks associated with these former highfliers. Still, social-media stocks continue to post solid revenue growth, as they build on their efforts to steal advertising dollars away from traditional media. The crosscurrents have made these stocks battlegrounds among investors.

This earnings season, two social-media companies -- Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) are moving in opposite directions. Facebook soared over 10% after its fourth-quarter earnings release, while Twitter declined by a similar amount following its own report.

So what's making one zig while the other zags?

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Image source: Getty Images.

It's all relative

Part of Facebook's and Twitter's divergence can be attributed to how they performed in 2018. As the chart below shows, Twitter actually had a banner year, with its stock appreciating nearly 20%. Meanwhile, Facebook shed 25% of its value over the same period:

FB 1 Year Price Returns (Daily) Chart

FB 1 Year Price Returns (Daily) data by YCharts.

Why the difference? One reason is that Facebook, much more so than Twitter, was square in the media's crosshairs throughout 2018. In the early part of the year, revelations related to the Cambridge Analytica scandal and the 2016 election had a devastating effect on Facebook's stock. CEO Mark Zuckerberg and chief operating officer Sheryl Sandberg were dragged in front of Congress and put on the defensive, amid accusations of selling user data to outside parties, unbeknownst to users. The stock was further beaten down after Facebook's second-quarter earnings call last July, when management unveiled plans to spend heavily on safety and security of user data even amid decelerating revenue growth. To top it all off, the company's PR firm Definers was caught in an embarrassing attempt to smear detractor George Soros, infuriating many.

While Twitter CEO Jack Dorsey also appeared in front of Congress last year, Twitter wasn't scrutinized to nearly the same extent as Facebook. The relatively tame media treatment allowed Twitter's earnings results to speak for themselves -- and they were impressive, beating analysts' revenue expectations every quarter in 2018.

Thus, it appears at least some of the recent divergence was merely a reversion to the mean, with each stock moving in the opposite direction of last year's performance.

Check out the latest Twitter and Facebook earnings call transcripts.

MAU growth diverges

While reversion accounted for some of the recent performance, each company's active-user metrics likely also played a role.

Despite the scandals of 2018, Facebook's user count didn't wind up showing any ill effects in the fourth quarter. Daily active users (DAUs) grew 8.7% year over year, while monthly active users (MAUs) rose an even higher 9%. Even the U.S. & Canada and Europe segments, which many had feared might decline amid privacy and security concerns, grew users year over year. Europe was especially encouraging, as last year's GDPR (General Data Protection Regulation) privacy regulations don't seem to have had a lasting effect on Facebook's European user base.

When asked on the earnings call about robust user metrics despite the large media backlash, Facebook CFO David Wehner said, "about the impact of the ... press cycle, I would just probably just let the numbers stand for themselves."

Twitter's user growth, by contrast, was a bit messier. Its monthly active user count actually fell 2.7% year over year and 1.5% quarter over quarter. That may be part of why management announced it would no longer disclose MAU numbers, instead pointing investors toward its monetizable daily active user count (mDAU). As was the case when Apple decided to no longer disclose iPhone units, investors did not take too kindly to the company hiding a potentially relevant user metric.

To its credit, Twitter's mDAU count did tell a better story, growing 9.6% year over year. Chief financial officer Ned Segal said, "we want to align our external stakeholders around one metric that reflects our goal of delivering value to people on Twitter every day, and monetizing that usage."

Still, there may be good reason for investors to discount this relatively solid mDAU growth. Since Twitter's MAU figure continues to fall as the company rids its platform of fake profiles and malicious content, some may wonder how large Twitter's true addressable audience really is. Additionally, Twitter's mDAU count only made up 39.3% of MAUs in the fourth quarter, whereas Facebook's DAUs made up 66% of MAUs, suggesting a more engaged audience for Facebook.

Driving in opposite directions

While fears over user declines plagued Facebook last year, recent results showed no material effect on users, paving the way for the stock's recovery. Meanwhile, Twitter's surging revenue last year has now been called into question, as the company's total addressable user base now seems more uncertain. These new data points relative to prior expectations are what's driving Facebook and Twitter in opposite directions.