Social media has become an integral part of most of our lives, but the leading players have seen better days as investments. Facebook (META -1.41%) has shed a quarter of its value since peaking last summer. Twitter (TWTR) has surrendered nearly a third of its value since last June's highs, and if we go all the way back to its post-IPO pop in late 2013, the stock has been shaved by more than half.

Facebook's recent hiccups have been widely reported. Data privacy concerns have been percolating since the credibility-wrecking Cambridge Analytica scandal broke last year. Usage growth has slowed, and it's open to debate if the lull is the result of the negative media coverage or just the natural plateau given Facebook's massive audience. It attracts 2.32 billion monthly active users, a good chunk of the world population with consistent online connectivity.

Twitter has had different setbacks. From censorship issues to the widespread presence of bots with nefarious intentions, Twitter has also weaved in and out of public critique. Thankfully for investors, the real story here is how both companies are improving their ability to milk more money out of their captive audiences, as both companies are growing their revenue at much headier clips than their user levels.

Check out the latest earnings call transcripts for Facebook and Twitter.

Facebook office in Germany.

Image source: Facebook.

Social distortion

Twitter is substantially smaller than Facebook -- with the market cap to match -- but they're both growing at roughly the same pace these days. Facebook's monthly active users began 2019 at 1.52 billion, 9% ahead of where its count was a year earlier. Twitter's monetizable daily active users have also climbed 9% over the past year to hit 126 million.

Ad revenue is growing even faster. Marketers don't have a lot of ways to reach young audiences that aren't consuming media from traditional ad-based outlets, so revenue in the fourth quarter rose 30% at Facebook and 24% at Twitter. Trends are diverging on the bottom line. Pre-tax margins are contracting at Facebook, as it takes a lot of ammo to put out the fires it started when it played things loose with its user data. Twitter's margins are expanding, but largely because they have been depressed in the past.

In terms of valuation, neither stock is cheap. Twitter and Facebook command enterprise values that are 7 and 7.8 times their trailing revenue, respectively. Earnings-based valuations are a bit more bloated, but the math is kinder for Facebook. The world's largest social networking website operator is trading at a reasonable 19 times next year's earnings. Twitter's profit multiple stands at 32 for 2020.

Picking the stock that will outperform the other in the year ahead isn't difficult, and as someone that owns shares of Twitter -- but not Facebook -- I have to hand the call to the investment that I don't own. Facebook is growing faster, and it commands a much lower earnings multiple. Facebook is also better diversified as the parent company of Instagram, WhatsApp, and other promising properties. Twitter should continue to claw its way back into favor, but Facebook gets the nod as the better buy at this point.