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Have Facebook and Twitter Stocks Become Attractive?

Have Facebook and Twitter Stocks Become Attractive?

The tech giant also admitted it expected user numbers to drop in the current quarter by a figure in the "mid-single-digit millions".

Facebook has more than 2.23 billion users while its apps WhatsApp, Instagram and Messenger each have over 1 billion.

Twitter's aggressive moves to clean up the platform had not detracted from its advertising revenue, said the social network's chief financial officer, Ned Segal, during a conference call.

Twitter's stock plunged 20.5 percent after the company said monthly users decreased in the second quarter.

To Twitter's credit, the dwindling user base is partially due to its own measures to battle spammy and malicious accounts.

Twitter raised its 2018 capital spending forecast and said adjusted EBITDA margins in the third quarter would be below the second quarter's.

Twitter shares took a pounding yesterday amid a warning of a shrinking user base, extending a stock market bloodbath for what had been a sizzling social media sector.

Whether the stocks are cheap depends on whether each company can get back to a strong pace of adding users.

Twitter had 335 million monthly users in the second quarter, below the 339 million Wall Street was expecting, and down slightly from 336 million in the first quarter.

"We are confident that this is in the best long-term interest of the platform and will enable long-term growth as we improve the health of the public conversation on Twitter", the company said in a note to shareholders.




The company's monthly active users were up 11% year-on-year but growth had fallen flat in the USA and Europe, also in part down to the roll-out of GDPR.

Facebook and Twitter each have hundreds of millions of users, with Facebook clearly in the lead. Long criticized for allowing bad behavior to run rampant on its platform, Twitter has begun to crack down, banning accounts that violate its terms and making others less visible.

Revenue of $711m, mostly from advertising and up 24% from previous year, exceeded the average estimate of $696 million among analyst research aggregated by Thomson Reuters.

The micro-blogging platform reported $711 million in revenue - an increase of 24 per cent year-over-year.

Twitter's relations with advertisers have been strained by concerns about phony accounts bought by users to boost their following.

Net income of $100.1 million, or 13 cents per share, beat expectations of $464 million and 6 cents.

"They're cleaning up a lot of MAUs that are not good or real", said Richard Greenfield, an analyst at BTIG, referring to monthly active users.

Having moved to paid SMS carrier relationships in certain markets where users have better access to Twitter or Twitter Lite, making changes to improve the "health" of the platform and some impact from GDPR, a set of regulations in the European Union meant to protect consumer data, was what Twitter anchors on as reasons for the setback.

Yet the market had more than doubled Twitter's value over the past year to $32 billion, and the valuation to 50 times estimated earnings.

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