Twitter Riskier Investment Than Facebook?

While Twitter's initial public offering was big news, now analysts are saying that investors should look to more established names in Silicon Valley such as Facebook and Google.

What? Isn't this an about-face from last year when everyone was pitching a fit because Facebook stock was tanking from its IPO? Apparently so. That was a year ago and now Facebook stock, largely buoyed by annoying ads popping up in newsfeeds, is profitable. Another profitable and more established company, Google, is also considered a logical investment.

Morgan Stanley analyst Scott Devitt said that while Twitter was a great social networking platform, "unlike Facebook, the microblogging company is at risk of remaining a 'niche product' that will find it difficult to expand to a broader, money-generating audience," according to MarketWatch.

The major factor against Twitter is online ad revenue where it's falling behind. Twitter had only 6 percent of the social-networked online ads while Facebook took home 66 percent of the $10.3 billion. Devitt also said that Twitter is just more complicated to use than Facebook. Also 90 percent of Twitter uses also log on to Facebook, but only 22 percent of Facebook users tweet, so advertising on both platforms seems foolish. Plainly, if buyers had to choose, Facebook would get the ad dollars.

Despite the report, Twitter's stock has risen nearly 150 percent since its Nov. 7 IPO to $61.81. Facebook is now hovering around $57.76, significantly higher than its IPO price of $38 but not as high as Twitter's climb. We're sure that eventually Twitter will figure it out because it also took Facebook several years to figure out how to be successful.
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