If Only Elon Musk Snapped Instead of Tweeted
If Elon Musk does eventually take over Twitter Inc. he will quickly discover the one feature he's disparaged the most, bots, are the key to the platform's ongoing growth. Musk may also be glad to see that its main rival in ephemeral social media, Snap Inc., doesn't even have that same “problem.”
Both companies reported earnings last week and similarly disappointed investors. On paper, Twitter's performance was worse. Revenue was 11% lower than expected and operating loss missed estimates by the equivalent of 35% of sales.(1) At Snap, the figures were 2.8% and 21% respectively. And yet Snap was punished with a 39% drop in its shares on Friday, while Twitter closed 0.8% higher.
It's not an exaggeration to say that Snap investors tend to overreact. Its shares move by an average 20% in either direction after earnings while those of Twitter swing 11%, according to data compiled by Bloomberg. This trend was in place well before Musk announced plans to buy the latter.
In the broad collection of internet and social media companies, Snap and Twitter are most alike. While Meta Platforms Inc. (Facebook, Instagram) and Alphabet Inc. (YouTube) can be considered rivals for attention and advertising dollars, neither are single-product companies that are highly dependent on the short attention spans of their audience. ByteDance Ltd.'s TikTok may be more analogous, but its parent company gets revenue from multiples streams thanks to a catalog of China-focused products like Douyin and Toutiao.
On Twitter, users publish short messages of up to 280 characters — sometimes adding images, videos or links — which remain on the platform forever, but are most viewed soon after posting. Snap is highly visual and even more immediate, with
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