Facebook's latest earnings show the power of mobile advertising. Is this an indication of good things to come for Twitter?
Facebook's latest numbers show at least one thing: mobile matters. And that could bode well for another social media company that is pretty much all about mobile – Twitter.
Out of Facebook's $2.59 billion in revenues for the last quarter of 2013, $1.24 billion came from mobile advertising. Just two years before, mobile ad revenues didn't even exist for the company. Now its 945 million mobile active users helped Facebook generate 53% of its advertising revenues.
All this could mean pretty good news for Twitter. Over 65% of Twitter's advertising revenues come from mobile devices, though its 215 million monthly active users are a fraction of Facebook's. According to stats from eMarketer, Facebook has nearly 17% of the total worldwide mobile ad market; Twitter has a little more than 2%. Both are dwarfed by Google's nearly 49% control of the world's mobile ad dollars.
According to CNBC contributor Andrew Busch, editor and publisher of The Busch Update, Facebook's approach is the model Twitter needs to follow. Twitter has lost $142 million over the last twelve reported months while Facebook's net income was $1.5 billion in 2013.
"This is where Twitter has to go," says Busch. "They have to continue to find way to monetize their network."
Steven Pytlar, Chief Equity Strategist at Prime Executions, believes that the technicals for Twitter's stock are improving.
"It's actually starting to look a bit better," says Pytlar. Pytlar notes that earlier on Talking Numbers, he and Busch discussed a support of about $55 in the stock. The stock subsequently hit $56.10 as a low on January 27 and bounced from that point.
(See: CNBC's Social Media coverage)
"What's really important is that it bounced," says Pytlar. What you see when a stock bounces in a broadly negative market – and the market has certainly been negative in January – is that the buyers in this stock are really just not caring about what's impacting the larger market. It means they're still accumulating. It means they're still positive on this stock."
For Pytlar, $70 offers an important resistance level because that was where a false breakout occurred on December 26.
"Getting through $70," says Pytlar, "would be a strong indicator that the selling pressure that developed in late December, which was probably a large phase of profit-taking following the very positive IPO, has been basically exhausted, that buyers are taking control, and that people are essentially looking for more growth in this stock."
Busch says traders should use Twitter's February 5 earnings report release to get an idea of the stock's long-term direction.
"See how the market reacts," says Busch about Twitter's earnings release next week. "If you get good earnings out of Twitter and it fails as a stock, I think we'll take out that $55 - $54 level. "
To see more of the discussion on Twitter with Busch on the fundamentals and Pytlar on the technicals, watch the video above.
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