In terms of analysis, is Twitter the new Facebook?

After reviewing what analysts are saying about Twitter’s earnings report yesterday, I find it hilarious and coincidental that much of what Wall St. is saying mimics exactly what we heard about Facebook a year+ ago. Even though Twitter more than doubled their revenue YoY, all of the focus has been on their user growth. User growth for the year was only 25% rather than the expected 30% (#OMG!). Active users increased 5.8% over the quarter (#SMDH).

I thought it would be worth reminding everyone that while Facebook’s user growth was still frowned upon in May of 2013, the stock would go on to almost double in price over the next 7 months. This is because regardless of what short-term focused analysts will have you believe, price eventually reflects growth in revenue, profits, and earnings… not users.

To that effect, investors should be pleased that Twitter’s revenue is growing so quickly. That growth should eventually translate into better earnings. Not to say Twitter will double in the coming months or that they will ever grow to be the behemoth that is Facebook… but maybe a -10% day is a bit dramatic.

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