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Tech Strategist: Twitter Is The Main Beneficiary Of Facebook's Privacy Scandal

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Tech Strategist: Twitter Is The Main Beneficiary Of Facebook's Privacy Scandal

Snap Inc (NYSE: SNAP) and Twitter Inc (NYSE: TWTR) started 2018 with roughly the same valuation, but vastly different sentiments.

Both companies started 2018 at around $18 billion in market cap, but a lot has occurred in the social media realm since then.

First there was the infamous Kylie Jenner tweet expressing her distaste for Snapchat’s new software update that reportedly wiped out $1.3 billion in market cap. Another public spat, this time with Rihanna, came after the platform ran an insensitive ad in reference to a physical altercation with former beau Chris Brown. It led Rihanna to put out a message to her 61 million followers encouraging them to delete Snapchat.

Negative tweets have impacted Snap, but a snap has rarely, if ever, had an effect on Twitter. 

Despite the turmoil, Snap remains relatively flat on the year, down 0.25 percent to date.

'There Is Not Much Wrong With Twitter'

Twitter has fared quite well so far in 2018, with shares up 15 percent year-to-date — the best performing social media stock in the market. Earlier in the year, David Einhorn announced that Greenlight Capital increased its Twitter stake, calling the platform undervalued compared to Facebook.

In March, Twitter announced a three-year deal with the MLS to stream up to 25 games a season on the platform.

Twitter’s plans to launch a camera-first feature could ultimately threaten Snapchat, CNBC reported in March.

One advantage Twitter has is cultural and journalistic relevance, and as long as President Donald Trump is still in office, this is unlikely to change.

Twitter has made notable changes to its platform, including the doubling its character limit from 140 to 280, a move that "increased engagement dramatically," said Quantum Trading Strategies' Sean Udall.

“There is not much wrong with Twitter. The power, durability, uniqueness and long-term viability of the platform will end up coming through in the long term. Lots of things have tried to attack Twitter, but at the end of the day, unlike Snap, nothing has actually decreased the usability of Twitter and there is a lot more they can still do,” he told Benzinga.

Unlike its competitor Facebook, Inc. (NASDAQ: FB), Twitter hasn’t necessarily been the go-to platform for small businesses to promote their brand. Twitter aims to change this, with CFO Ned Segal telling CNBC last month: “We’re creating a subscription product for businesses to advertise on Twitter.”

Udall: Twitter Stands To Gain $400M In Ads 

Perhaps no stock in the entire market has had a greater fall from grace of late than Facebook, which is embroiled in a privacy scandal with Cambridge Analytica. The company continues to battle claims of being an amplifier for Russian interference in the 2016 presidential election. 

While Twitter shares have fallen since the Facebook scandal became public, Twitter will be a main beneficiary of advertisers leaving the social media giant, said Quantum Trading's Udall. The platform could realize more than $400 million from advertisers leaving Facebook, he said. 

“Unlike Twitter, I do think we have seen how good Facebook can be, and I think Facebook needs a radical change to become fun to use again," he said. "Twitter will pick up quite a business from Facebook — it will be a small drop in the bucket for Facebook, but it will be meaningful for Twitter."

Facebook shares are down over 12 percent year-to-date.

Related Links:

Baird: Will Data Scandal Impact Facebook Usage Metrics?

Citron Slaps $25 Target On Twitter Amid Data Privacy Concerns

Posted-In: Cambridge Analytica Citron ResearchAnalyst Color Short Sellers Top Stories Exclusives Tech Interview Best of Benzinga

 

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