The social networking space is becoming a tale of two worlds. Customers who boycotted Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) only half succeeded in the summer. Twitter’s activity weakened while Facebook enjoyed strong profit growth.
Investors should avoid Twitter as it continues to lose its way. The microblogging site is playing with politics by selectively censoring users. Users are responding by reducing their activity. In Q3, it posted revenue growing 14% to $936 million. Its EPS of 19 cents beat the 14-cent consensus. Costs rose 13% to $880 million, resulting in operating margins of just 6%.
Twitter has too many expenses ahead to justify owning shares. Its total GAAP costs and expenses will grow to 20% year-on-year in the fourth quarter. Conversely, users are likely leaving the site to hotter platforms, like Facebook’s Instagram and Snap (NYSE:SNAP).
In the third quarter, Snap posted revenue growing a solid 72% to $679 million. Its losses shrank to $199.85 million. Average Snaps creation rose by 25% Y/Y. Thanks to viewership on SportsCenter, daily time spent grew by over 50%. Similarly, Pinterest (NYSE:PINS) enjoyed a growth of 37% in monthly active users.
Investors should avoid Twitter, hold Facebook, and watch Snap and Pinterest stock.