Is Facebook proving to be the darling of social media?

In showcasing contrast to Twitter's horrendous earning call on Tuesday Facebook outshone its competitors by beating analysts expectations with a superb set of numbers that cemented the foundation for the future of profitability.

Recording revenue of $6.24 billion for the second quarter of 2016, a significant portion of the total global advertiser spend on social media, Facebook is disproving Wall Street's doubts over ways the industry sees itself monetising the social media business model by drifting into the territory once dominated by television and radio.

What distinguishes Facebook from the rest of its competitors is the enormous accumulation of users on a diversified portfolio of social networking platforms that grants it first pickings to lucrative advertising deals due to the high concentration of active users with a wide exposure to choose from.

Monthly active users

• Facebook:  1.7 billion 
• WhatsApp: 1 billion
• Messenger: 1 billion
• Instagram: 500 million       

Facebook trounces Wall Street estimates with sharp ad sales growth https://t.co/BGd31egmU3

— Reuters Top News (@Reuters) July 28, 2016

With numbers like these no wonder they're reporting rapid jumps in revenue. If you compare the users of Instagram to its closest competitor Twitter who reported dismal earnings on Tuesday the gap between MAU (Twitter has 313 million) is quite staggering. Needless to say a strong opposition from the likes of upcoming Snapchat barely moves the dial in terms of Facebook with 1/6 th of its users.

Facebook's position in the sphere of social media means its unique to its competitors which plays favourably in the bigger scheme of things. It's certainly planted itself as a sustainable business we'll continue to follow with relevance in the next 10-20 years.

But just as Facebook clears the benchmark definition of continuity it's opposition searches desperately for ways to imitate the success of it with little luck so far. What will be needed from its competitors is an unwavering belief from investors that its model and management have what is necessary to successfully upend Facebook's dominance as well as a willingness to fund the business throughout the period of reaching this point.

Both these requirements don't look certain to be found in the medium term offering Facebook a chance to cash in on a once in a lifetime bonanza thus building a strong cash reserve for future endeavours. From where I stand it looks as if Facebook is going to be the darling of social media for the next few years.    

Twitter's quarterly earnings disappoint...again!

Hope in management's turnaround strategy at troubled social media company Twitter is fading fast with yesterday's earning call falling hopelessly short of analysts expectation in reporting an almost flat growth rate in monthly active users and revenue misses that leave investors pondering over CEO Jack Dorsey's plan to reinvent the company he started back in 2006.

MAU of 313 million as opposed to 500 million from nearest competitor Instagram suggests the company is falling behind in terms of relevance amongst users as new rival Snapchat comfortably overtook the worrisome news feeding outlet in the month of June.

Some might argue Twitter's target market could be the reason for the company's stagnancy with the market leader Facebook together with its ownership of WhatsApp messaging service tapping into a youthful audience less reluctant to engage fully with its services. Whereas Twitter feeds the new community, a rather small amount of social media users, its rivals have leaned their platforms towards interaction on a personal level which clearly is working.

This in effect leads more users to be drawn to the platform, leading advertisers to showcase their products where they get the greatest exposure. Twitter haven't enhanced their platform enough to encourage more users to join leaving revenue growth prospects bleak and advertisers less willing to place their marketing campaigns on their platform.

So much promise had been made at the start of Dorsey's second tenure yet we haven't seen the fruition of ideas come to light. Probably the most disappointing measure that was reported yesterday was the drop in research and development costs. It's as if management isn't committed to improving the functionality of its platform which flies in the face of amassing new users.

Back in February I wrote a piece saying mergers and acquisitions in the social media space could be a big news story this year. So far we haven't been left doubtful with Microsoft's purchase of LinkedIn and more recently Verizon's takeover of Yahoo's search engine. With Twitter market valuation under consistent pressure from stockholders the likelihood of a buyout from a bigger firm is increasing.

Who will that company be?

Twitter shares dropped 10% in after-hours trading after it missed revenue estimates https://t.co/UJLdQ4helX pic.twitter.com/rIFEk4n8sD

— Forbes (@Forbes) July 26, 2016