As the folks over at Twitter, Inc. (TWTR) prepare for their upcoming IPO on November 6th, analysts far and wide are providing their insights on what will happen when the tech giant goes public next week. After each analyst outlines their opinions on Twitter, many of them begin the comparison to fellow social media company Facebook (FB), as is done in the article linked above. It's understandable to see why so many people are inclined to draw a parallel between the two as they both operate in the same industry and attract many of the same users. However, when the most important part of a business, its functionality, is concerned, the differences between the companies are abundant.
Facebook is a social media website in which users can interact in a plethora of ways. There are detailed profiles in which someone can describe hundreds of facts about themselves ranging from their favorite movies/interests to who their family members are. Each profile also has a "wall" in which users can like, post, share and comment on links/posts made by other users. It also boasts a chat function that allows friends to communicate instantaneously, comparable to AOL's (AOL) Instant Messenger that was popular in the early 2000s. In addition to all of those capabilities, Facebook has a vast gaming aspect to the website that companies like Zynga (ZNGA) were able to use to launch their business. FB has 2,431 games (according to Appdata.com) across all genres that users can enjoy individually or compete against one another and share their results with their friends. Private groups, events, like pages and photo albums are also functions that Facebook users can utilize to further enjoy the social networking site.
Twitter, on the other hand, can be categorized as specifically as a microblogging network. A microblog is essentially the same thing as a blog except the posts are usually much smaller in length, as exemplified by Twitter's 140 character limit per tweet. Twitter is significantly limited in its functionality, especially when compared to Facebook. Users of Twitter are given a profile in which they choose a photo to be their profile picture and can customize a short bio which is situated directly under the picture that picture. Once those two short tasks are completed you are ready to use Twitter. Users then start to "follow" people in order to subscribe to that person's posts or "tweets" and gain followers of their own. Users can post their own tweets, retweet someone else or favorite a tweet of someone else. There is also a direct message function but that is seldom used for anything other than accounts sending out spam. This is not meant to be a slight to TWTR in any way, just an illustration of how different the two social networking sites actually are when examined closer.
Another huge difference between Facebook and Twitter is the focal point of user activity. 63% of Twitter users access the network from their mobile phone while only 48% of Facebook users do the same according to CEO Mark Zuckererg on FB's most recent quarterly conference call, which the company considers as a large accomplishment. 65% of Twitter's advertising revenue came from Apple (AAPL) iOS and Google's (GOOG) Android devices alone where only 49% of Facebook's ad revenue comes from the entire mobile segment. Facebook has made huge strides in making their mobile app more desirable for users but Twitter will always be more utilized on mobile platforms due to the simplicity of its interface and functionality.
Instagram is also a massively popular social media app that floods users' news feeds exclusively with photos and videos. Instagram was bought by Facebook back in 2012 for $1 Billion. This acquisition only further diversified Facebook's interests, leaving Twitter looking even more refined in its purpose when viewed comparatively.
Twitter's impending IPO leads many to reflect on the disaster that was Facebook's 2012 IPO. A "technical error" as described by NASDAQ is what led to the giant debacle. The hysteria that ensued resounded around Wall Street for weeks and is arguably the cause for another difference between Twitter and Facebook, the exchange in which the companies trade on. Twitter made the high profile decision to enlist their IPO on the New York Stock Exchange (NYSE) instead of the NASDAQ where most technology companies are listed such as Facebook, Apple and Google. The residual influence of Facebook's IPO prompted the NYSE to run stress tests on their systems to ensure that a similar discrepancy does not occur.
This article is not designed to encourage or discourage anyone from investing in Twitter once it begins trading on Tuesday, but rather to bring attention to the fact the Twitter and Facebook are two entirely separate companies. It is easy to equate the two but investors must not get caught up in the ever-present comparisons and acknowledge each company for its own strengths and weaknesses. Best of luck to all investors.