Why Twitter might be stronger than Facebook right now


One of the biggest concerns about Facebook (Nasdaq: FB) is that its future revenue might be negatively affected by the growing shift toward mobile devices. Twitter CEO Dick Costolo doesn’t see this as a problem for his business, however. At a recent event sponsored by The Economist in San Francisco, he said, “we’re born of mobile” and are “set up for success” in this area.

A business that is working fabulously
Costolo shared a lot of fascinating data and insights at the conference. Twitter currently has 140 million active users who produce 400 million tweets a day. Two and a half years ago, the company decided to go with an ad-based model, though it also pursues data licensing opportunities as well. Costolo said that Twitter is an advertising platform, and that’s how it will go to market.

When asked whether Twitter was thinking about a possible IPO now that Facebook had gone public, Costolo said that management isn’t focused on that at all, and prefers to think about the long term. The business is “currently working fabulously,” according to Costolo, and he’s really excited about the future.

A recent report from Bloomberg seems to support Costolo’s view. According to two people with information on the issue, Twitter is expected to deliver US$1 billion in sales in 2014 — a mere eight years after its founding. For comparison, Google (Nasdaq: GOOG) crossed the US$1 billion mark five years after its founding, while Facebook achieved that milestone just six years after getting started.

Born to be mobile
For investors, Costolo’s remarks on mobile were particularly intriguing. Despite only just having begun to run ads there, Costolo shared that Twitter has generated more advertising revenue from its mobile platform than from its website on several days recently. He believes that Twitter ads are “inherently suited to mobile” and that mobile revenue is “already doing delightfully well.”

While Costolo was clearly contrasting Twitter’s mobile success with Facebook’s very public challenges in that area, this is also encouraging news for Internet companies in general. Google, LinkedIn (Nasdaq: LNKD), Zynga (Nasdaq: ZNGA), and many others join Facebook in trying to figure out mobile, so understanding what works there will be critical to all of their futures. At the D10 Conference last week, Mary Meeker of Kleiner Perkins was very optimistic about mobile monetisation when she reported that the “data in Japan proves that the users can be monetised.”

An amazing leader
Twitter co-founder Jack Dorsey has described Dick Costolo as “an amazing leader” who deserves a lot of credit for developing Twitter’s advertising model. After listening to the interview with Costolo, I came away very impressed with him and Twitter.

The company clearly has a solid business model, while also providing a wonderful service that brings the world closer together. As an illustration of the latter phenomenon, Costolo shared a wonderful story about how researchers from Johns Hopkins were able to track the spread of influenza by analysing 2 billion public tweets. Twitter, according to its CEO, is always evolving in unknown ways that are often driven by its users. The company appears to have a very bright future, and it may be one of the leading pioneers in figuring out how to be profitable in the mobile era.

If you’re in the market for some high yielding ASX shares, look no further than our “Secure Your Future with 3 Rock-Solid Dividend Stocks” report. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

 More reading

The Motley Fools purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

A version of this article, written by John Reeves, originally appeared on fool.com

OUR #1 DIVIDEND PICK FOR 2016...

Forget BHP and Woolworths. This "dirt cheap" company is growing like gangbusters, and trading on a 5.6% dividend yield, FULLY FRANKED (8% gross). With interest rates set to stay at these low levels for years to come, for hungry investors, including SMSFs, this ASX company could be the "holy grail" of dividend plays for 2016.

Enter your email below to discover the name, code and a full investment analysis in our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2016.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.