Website traffic trends can be telling. Measures of visits to a company’s website can hint at how well the company has been performing, thus helping investors predict how the company’s earnings release will look. Social media companies, which rely so heavily on traffic to their platforms, are especially likely to have statistics about visits to their platforms mirror their earnings: increased visits can easily translate into increased revenue and earnings.
Comparisons of the performance of two social media giants, Snap and Twitter, is enhanced by examination of their website traffic patterns. The traffic numbers help us predict these companies’ performance, ahead of earnings.
Snap (NYSE: SNAP)
Shares of Snap, which calls itself a camera company, have seen a pullback in the past year as shares have tanked 23.3% in the past year. This has been largely due to the company’s disappointing Q3 results that resulted in a revenues miss. However, SNAP continues to be a top trending website.
For Q4, the company’s management stated on its earnings call, “As we look forward to Q4, we face a variety of challenges in the operating environment including the iOS platform changes, as well as macro uncertainty driven by supply chain disruption and labor shortages.”
Here, the iOS platform changes refer to the changes that came into effect after the launch of Apple’s (AAPL) iOS 14.5. This resulted in app developers being unable to track a user’s Apple’s Identifier For Advertisers (IDFA) if a user opts out of sharing privacy details while downloading an app from AAPL’s app store.
The company anticipates revenues to range between $1,165 million and $1,205 million in Q4 while adjusted EBITDA is projected to range from $135 million to $175 million.
Will the iOS platform changes and supply chain constraints be disruptive for SNAP? Jeffries analyst Brent Thill has termed these headwinds “as transitory.” He believes the stock could outperform in 2022.
Moreover, the analyst thinks that there is an increasing monetization opportunity due to a rise in user engagement and growing advertising revenues.
Indeed, in Q3, daily active users (DAU) soared 23% year-over-year to 306 million for SNAP while revenues jumped 57% year-over-year to $1.07 billion.
Thill is also positive about the monetization opportunity that exists when it comes to SNAP Maps, Augmented Reality (AR), and Spotlight.
The analyst has a Buy rating and a price target of $65 (50.1% upside) on the stock.
Other analysts on the Street echo Thill and are bullish on the stock, with a Strong Buy consensus rating based on 21 Buys and 6 Holds. The average Snap stock prediction of $71.40 implies upside potential of approximately 64.8% to current levels for this stock.
The upward trend for SNAP is also indicated by the website traffic data available on TipRanks. This data indicates that the monthly growth in December for unique visitors jumped 52.5% year-over-year to 26.2 million, while unique visitors to snapchat.com across all devices in Q4 have increased 24.3% year-over-year to 68.6 million.
Twitter (NYSE: TWTR)
Twitter has seen plenty of changes this past year, as Co-Founder and former CEO Jack Dorsey resigned from Twitter to make way for his long-time friend and Chief Technology Officer of Twitter, Parag Agrawal. Agarwal is the new CEO of Twitter.
Dorsey, however, will remain on the board of directors until his term ends in May 2022. The company also named Bret Taylor as the new Chairman of the Board.
These changes have resulted in the stock falling 13.6% in the past year, as according to Jeffries analyst Brent Thill, investors remain skeptical about whether Twitter will be able to achieve its goal of revenues of $7.5 billion and 315 million monthly DAUs by 2023.
The analyst added that “historically, TWTR’s pace of innovation has been sluggish, so investors are hoping for faster product development going forward.”
As a result, Thill believes that the stock will continue to be “range bound in the near term, as investors will need to see evidence that user and revenue growth targets for 2023 are achievable.”
While the analyst is positive about the management changes, he does not expect the company transformation to happen overnight. Thill is also upbeat about the user growth but is “disappointed with the relatively sluggish pace of innovation on the ad products.”
As a result, Thill is sidelined with a Hold rating and a price target of $45 (10.7% upside) on the stock.
The company had announced on its Analyst Day that it intends to grow its mDAU at a Compounded Annual Growth Rate (CAGR) of 20%, and is targeting having direct response (DR) offerings comprise 50% of its revenues.
In the third quarter, Twitter’s Monetizable Daily Active Usage (mDAU) grew 13% year-over-year to 211 million and its DR offerings currently comprise around 15% of its total revenues.
Other analysts on the Street echo Thill and are sidelined on the stock with a Hold consensus rating based on 6 Buys, 17 Holds, and 2 Sells. The average Twitter stock prediction of $64.13 implies upside potential of approximately 57.7% to current levels for this stock.
The website traffic data available on TipRanks for Twitter is encouraging. This data indicates that in Q4, unique visitors to twitter.com across all devices have increased 4.2% year-over-year to 1.9 billion.
Bottom Line
While analysts are bullish about SNAP, they are sidelined about Twitter. Additionally, website traffic to Twitter has grown, but by a much smaller percentage than that of Snap.
Based on the upside potential over the next 12 months, SNAP does seem to be a better Buy.
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