Twitter’s Makeover Not Yet Enough to Hurt Facebook

Twitter’s brand new look and increased personalization may take it closer to the likes of social networking giant Facebook. The micro-blogging site’s revamped structure resembles Facebook’s features in many ways, especially the news feed and a more comprehensive user profile page. ^[1] Although Twitter has grown rapidly, tripling its revenues since 2010, ^[2] we expect that Facebook’s remarkable user stickiness and tremendous hype over its initial public offering (IPO) should still keep Twitter in the background for now.

See our complete analysis for Facebook

Good News for Twitter, But Not Bad News for Facebook

Twitter manages around a billion tweets every week and has over a 100 million active users. ^[3] Through the recent “Discover”, “Home” and “Me” sections, the company’s efforts are quite clearly directed toward increasing monetization for its display ads by increasing user engagement. Twitter has undoubtedly taken some cues from Facebook here. For example, the “Connect” section follows Facebook’s news feed principle enabling a better view of who is following or has mentioned a user in a conversation.

While these initiatives are definitely good news for Twitter investors, Facebook has and maintains a significant gap in terms of both scale of use and revenues. Facebook is expected to more than double its revenues in 2011 to around $4.3 billion, ^[4] more than 30 times that of Twitter’s $140 million, and we do not expect Twitter to dent Facebook’s stronghold at least not until latter’s much awaited IPO in mid-2012.

We currently value Facebook at around $45 billion.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Twitter Blog: Let’s Fly [↩]
2. eMarketer: Twitter Ad Revenues to Grow 210% to $139.5 Million in 2011 [↩]
3. The Telegraph: Twitter Relaunches with Facebook-style Makeover [↩]
4. Bloomberg: Facebook Revenue Will Reach $4.27 Billion, Emarketer Says [↩]