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U.S. & World

Why Twitter It is Not a Good Investment and Facebook is Better

By on November 7, 2013

Many of you might already know that Twitter went officially public yesterday (November 06, 2013) selling at $26 a share. Consequently, it has captivated the attention of many investors aiming to make quick bucks out of the microblogging site, Twitter.

Twitter priced 70 million shares at $26 on Wednesday evening. (Reuters)

Twitter priced 70 million shares at $26 on Wednesday evening. (Reuters)

However, many of you might even know what twitter is or how to even use it. Personally, I created a twitter account a while ago, approximately around 2009. I have tried multiple of times to use it because I know it is an essential tool for social media advertising, and I even promised myself that I would force myself to make it a habit; however, I can honestly say, “I failed”. And, I am certain that many of you might feel extremely related with my experience.

On the other hand, Facebook I understand it much better. I barely use it now because of the lack of time that I have due to work and school. I mostly use to talk to friend and sometimes to get a good laugh from the videos that my friends share.  Moreover, the business model that Facebook has is much easier to understand than Twitter is. Therefore, I can confidently say that Twitter (TWTR) is not a good investment and Facebook (FB) makes more sense.

Logical Perspective:

Twitter has 232 million active users.

Facebook has 1.11 billion active users .

Twitter users have higher percentage of inactivity than Facebook user. This means that people that join these two different social media tend to vary their activity in them. Facebook has a higher success rate in engaging their users; however, there is  a large percentage of Twitter accounts that are inactive.

Economic Perspective:

If you are going to invest in any company, you should invest in company that you understand how the business work. Honestly, twitter is a little risk. First, not knowing how it work or what it even is might be a signal.

Facebook has more users; therefore, more businesses will spend money for advertising in it. In contrast, Twitter just has a small of active users. I am not saying Facebook advertising works amazing because it does not. In addition, it is safe to assume that twitter advertisement performs even worst.

Ultimately, both companies are somewhat different when it comes to business models and how they work. And, it is up to you (the investor) to decide which one to pick. I hope that you will make the right choice.

The opinions expressed in this commentary are solely those of Luis Villacrez. Other than DemaG.com, Luis Villacrez does not own positions in any individual stocks.

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