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Twitter vs. Facebook: Wall Street Is Paying More for Less

Here’s a quick quiz. Which social media network should be valued more highly: a) the one that is used by almost everyone daily or b) the one that a minority of people, other than journalists, use? If you answered A, you may be in a position to make some money trading stocks.

I’m talking about the current stunning valuation gap between Facebook and Twitter. On one of the most common metrics used to compare stocks— how much the company would cost to be acquired relative to its underlying profits—Twitter is currently trading at more than twice the level of  Facebook.

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Martin Green and Linda Holliday commented on this article.
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Joe Lonsdale
Joe Lonsdale
Founding Partner, Eight
Chamath Palihapitiya
Chamath Palihapitiya
Founder & Managing Partner, SocialCapital
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Investors either believe that Twitter will become a much more vital money machine, in which case the stock at current levels looks reasonably priced, or they don’t.