The Market Turned Its Back On Facebook Earnings, As Twitter Looms

By Douglas A. McIntyre Published Nov 2, 10:25AM EDT

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Facebook’s (NASDAQ: FB) earnings release is less than a week old. In such short period of time, Wall St. has shrugged them off. On the most recent Monday the stock topped out just above $51. It closed the week at just below $49. So, barely a hint of sentiment, perhaps because the numbers were about what was expected, perhaps because there was as much good as bad news in Facebook’s earnings statements, or perhaps because the market has turned its attention aggressively toward Twitter. The anxiety that dinged sentiment about Facebook goes beyond the company to the anxiety about social media in general

Facebook’s number would be the envy of almost any other. Revenue rose to $2 billion in the third quarter from $1.3 billion in the same period a year ago. Net rose from a loss of $59 million to $425 million. Year over year daily active users rose 25% to 728 million. The causes for alarm came on the earnings call as the firm’s CFO said the there was some erosion in teen use, and a sharp slowing of the advertising messages which could be put into news feeds.

Both concerns about Facebook’s future run across all social media sites, and will bedevil the Twitter IPO. If users reject advertising as “part of their experience” they will either ignore them or revolt against them. The Achilles Heel of social media is that members think they own the sites instead of shareholders. There are no other industries in which that belief is quite as strong.

The use of Facebook by teens or anyone else is probably not a direct rejection of the social media company and its primary service. Twitter does not face that challenge either. However, the crowding of social media destinations has started to look like cable television three decades ago. Instead of the dozen challenges people could get in the early years of cable, those same viewers can get 500. And each of the 500 does whatever is within its power to pull audience from competition.

Facebook investors have begun to eye Twitter more carefully. What they see is the refection of an industry which has become too crowded in a remarkably short period of time.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.