Both of the U.S. social media giants delivered a striking earnings report on the same day.
Twitter's revenue for the first quarter of 2022 was $1.2 billion, up 16% year-over-year, and net profit was $513 million, up 655% year-on-year, affected by a slight premarket increase of 0.74%.
Facebook's parent company, Meta, which disclosed earnings data earlier, had revenue of $27.9 billion in the first quarter of 2022, up 7% year-on-year, and net profit of $7.5 billion, down 21% year-over-year. Meta's after-hours share price rose sharply by more than 19% thanks to higher-than-expected earnings per share and an out-of-expectation first-quarter active user (DAU growth of 1.96 billion, compared to 4% increase compared to market expectations of 1.95 billion).
Behind the re-emergence of stock prices is the fact that both social media platforms are actively seeking change: Meta has changed the meta-universe and redesigned the business architecture; Twitter has directly replaced the big BOSS, replacing the lack of aggressive Twitter management by Musk, the most daring entrepreneur in the world today.
Meta and Twitter have invariably switched growth engines because companies have reached a dead end in recent years.
Facebook, created by Zuckerberg, has become the absolute hegemon of graphic social networks in 18 years, sitting on nearly 3 billion users worldwide, but in the new era of video social networking, Facebook has lagged behind. After TikTok from China was launched in 2017, it took only 4 years to accumulate 1 billion users around the world, and for two consecutive years, the global download volume surpassed Facebook, ranking first in the world, making Zuckerberg have to sigh at the fourth quarter of last year's earnings conference, "TikTiok is such a strong competitor." ”
The intuitive change that this shock has brought to Facebook is that its DAU has declined for the first time in the fourth quarter of last year, user retention time has also begun to decline, and more seriously, Facebook is losing the love of young people.
Twitter, which was founded only 2 years later than Facebook, once stood on a par with the former in terms of user volume and influence, but Twitter not only repeatedly missed the social media transformation, but also did not show Zuckerberg's boldness to make a large-scale competitive acquisition, and to this day, the number of Twitter users has only remained at about 300 million.
Compared with Facebook, which earns more than $80 million a day, Twitter, which has been established for 16 years, is still in a profit puzzle, with net losses of $1.14 billion and $221 million in 2020-2021, respectively.
The arrival of strongman Musk is seen by the outside world as a major positive to change the decadent status quo of Twitter. Since Musk first disclosed himself as Twitter's largest shareholder on April 4, Twitter's stock price has risen by more than 40%.
Whether the heart-changing surgery of the two social media giants can be successful depends on zuckerberg and Musk's respective transformation plans.
A
After the $3 billion acquisition of VR headset maker Oculus in 2014, Zuckerberg explained the reason for the acquisition: Missing the design of smartphones and their operating systems, many companies can only become vassals of Google and Apple. In the future, only by having its own hardware platform and system can we control our destiny.
Zuckerberg firmly believes that VR will be the most important computing and communication platform after mobile phones.
This also explains to some extent why Zuckerberg is betting on the metaverse, and he hopes to get rid of the control of his own software by platforms such as Apple and build his own rules.
That fear began to become a reality last year. After Apple's iOS privacy policy adjustments, Meta expected this impact to lead to at least $10 billion in revenue reduction in the fourth quarter of last year. In the first quarter of this year, Meta once again stressed that Apple's new iOS regulations will continue to affect the company's advertising growth goals and performance measures.
Last October, Zuckerberg renamed Facebook to Meta and for the first time announced the results of the company's meta-universe business, Reality Labs, which includes hardware, software and content products related to AR (augmented reality) and VR (virtual reality) in its fourth quarter earnings report.
In the first quarter, Reality Labs revenue was $695 million, less than analysts expected at $677.1 million, down 20.7 percent from $877 million in the fourth quarter of last year, according to the earnings report. The new engine of the meta-universe with bleak revenue prospects, coupled with the first decline in the number of daily active users, has fallen by more than 40% compared with the peak of the fourth quarter of last year, and the total market value has fallen by nearly $400 billion.
However, from the first quarter of this year' earnings report, investors' rational understanding of Meta is gradually recovering, after all, as the world's largest social media platform, Meta "family" (including Facebook, Instagram, WhatsApp and Messenger services) DAU average still reached 2.87 billion people, and the number of monthly active users (MAU) reached 3.64 billion, which is still a high-value company with Daily Jindoujin.
When the rejection of Zuckerberg's decision to turn to the metacosmum has been digested, the market is slowly regaining confidence, and Meta may have reached the stage of bottoming out.
The eye-catching earnings performance in the first quarter of this year also left Zuckerberg with more trial and error time to replace Meta with the heart of the metaverse.
Compared with Zuckerberg's fear that Meta's future is about to fall behind, and Twitter, which has fallen behind in the age of graphics, the desire to transform the growth engine is more urgent.
If the current tepid status quo continues, Twitter may even break through the hundreds of billions of dollars, let alone catch up with Meta again. Whether it is marketing or product function, Twitter has accumulated a series of problems, whether there is a Musk initiative to initiate the acquisition, Twitter has reached a moment when it must be changed, otherwise Twitter may really have to "die".
For Twitter today, it has become unrealistic to expect current management or internal elders to drive change, and even Jack Dorsey, one of Twitter's founders, is unable to change the situation and has to give up the CEO position. When it's time for Twitter to look for new variables from the outside, Musk's inclusion in Twitter may really rekindle creativity within the company as the most imaginative entrepreneur on the planet.
B
After acquiring Twitter, Musk and Zuckerberg finally stepped into the same river of social media. As a person who has repeatedly achieved miracles in space exploration and electric vehicles such as Space X and Tesla, the outside world can't help but wonder if Musk can perform miracles on Twitter again.
In the early morning of April 28, Musk tweeted that he might consider buying Coca-Cola next, but an hour later, Musk posted that "let's make one of Twitter's biggest jokes!" And in a subsequent reply to a netizen's proposal to buy McDonald's, he wrote, "Listen, I won't create a miracle okay?" ”
However, as a heavy Twitter user, Musk clearly has a lot of ideas about how to transform Twitter. After announcing his intention to wholly acquire Twitter for $43 billion on April 14, Musk said in an interview with TED Chairman Chris Anderson on the same day that his biggest motivation for acquiring Twitter came from making it an inclusive stage for free speech.
If you take Meta as a reference, Musk's top priority after taking over Twitter is undoubtedly to reactivate user activity and attract as many new users as possible. As a social media company, the size of users determines how high the ceiling of the platform is, as evidenced by Meta's nearly $500 billion market value corresponding to the current nearly $500 billion daily active, and Twitter's nearly $40 billion market value corresponding to more than 200 million daily active users.
The most powerful way to increase the size of users is to make better product features, and the rapid rise of TikTok is a latest example of product success. For Musk right now, one of the features that Twitter needs to cite directly may be to support the editing and publishing of long articles.
After all, Weibo, which imitates Twitter in China, has long been introduced for a long time. From the perspective of musk's freedom of speech, supporting the publication of long articles is also in line with his desire to maintain more user speech and discussion.
Twitter is well known in the conservative industry for its new features. After Dorsey co-founded Twitter in March 2006, in order to reduce the cost of text messages, the company decided to limit the number of characters sent to 140 per time. As network bandwidth became widespread and costs fell, Twitter didn't revise the word limit per tweet until November 2017, from 140 characters to 280 characters.
For Musk, who pursues efficient execution, there is more to solve than just adding long articles. In order to meet the video era, Twitter also needs to increase relevant investment.
As with sticking to 140 words, Twitter currently only supports videos of up to 140 seconds, and users must go through a professional publishing tool to post 10-minute videos. In contrast, TikTok and Weibo have supported medium-length video content of more than 3 minutes.
There is also a transformation that cannot be ignored from the team culture. Whether it is Space X or Tesla, their success is inseparable from a group of loyal employees who surround and worship Musk, and Twitter is divided into different factions.
Musk
A small survey of 200 Twitter employees conducted by Blind, a workplace anonymity community, showed that 27 percent expressed hatred for Musk. Some employees said bluntly: "I feel like I'm going to throw up... I really don't want to work for Musk. Some employees directly complained about Musk supporters within the company: "Those 'Elon boys' are all brain-dead ventilators, you can see a lot on Twitter, I can't wait for Musk to cut half of us." 」 ”
On the day of the acceptance of Musk's offer, Perez, Twitter's head of social health product management, tweeted: "This is a truly troubling and uncertain time, and most of us firmly believe that Twitter is more than just a technology platform and has a significant responsibility to society, and hopefully our new boss will understand this." ”
C
Before Musk bought Twitter, the social media giant almost got into Zuckerberg's pocket.
According to Twitter co-founder Bits Stone, in 2008, Twitter had negotiated with Facebook about the acquisition.
That fall, Facebook made a $500 million takeover offer to Twitter. By the time Stone and the others went to Facebook, Zuckerberg was already sitting in the only single chair in the conference room, and Stone and Williams (another co-founder of Twitter) who had nowhere to sit were crammed into a small double chair.
Eventually, because Zuckerberg thought the $500 million figure was too big, Facebook offered a cash-plus-stock acquisition, but Williams refused.
According to media reports at the time, Facebook did not have $500 million in cash on its books at the time. In May 2008, Facebook's global unique access users had just completed the milestone of surpassing rival Myspace for the first time, with more than 100 million users and annual revenue reaching $300 million.
In contrast, Twitter, although it has been on the market for 3 years, has not yet found a definite business model, and the scale of platform users at the end of 2008 remained at 4-5 million. Facebook adds as many new users as Twitter adds in a month, equivalent to half of Twitter's total users.
Time has changed, and former competitors have begun to enter a new stage of transforming growth engines, but the road to heart replacement surgery is not smooth.
Meta bet on metacosm, the business has maintained losses in the billions of dollars for many consecutive quarters, and in the foreseeable future, Zuckerberg will also burn crazy money on the metacosmonic business.
After announcing the change to Meta in October, Zuckerberg said that metacosmity will become a long-term strategy for the company and will build Facebook into a metacosmity company through a five-year layout. Based on this calculation, Meta will invest at least more than $50 billion in the metacosm in the future.
Moreover, the realization of the metacosmity is not achieved by Meta alone, but also involves multiple constraints of transmission technology, interaction technology, and regulatory factors. Whether the vision of Meta can be realized in five years is still a big question mark.
Feng Chao, a senior analyst at Cinda Securities, once wrote that Zuckerberg's bet on the metacosm was a "wrong move". Because in his view, the layout of the metacosm at this stage cannot enhance the user stickiness of Facebook's original products.
As for The Twitter that Musk is about to take over, the outside world is also full of worries, one of the main concerns is that Musk, who is circling Space X, Tesla and many other companies, has long been dubbed the title of "time management master" by the outside world, how much energy he can still share with Twitter, even if there is, whether these forced allocations of energy will affect the established development of Tesla and other companies.
Tesla's stock price movement also confirms this layer of concerns. The day after Twitter announced its acceptance of Musk's $43 billion takeover offer, Tesla shares fell 12 percent directly, wiping out $126 billion overnight in its total market capitalization.
As Yishan Huang, former CEO of social news platform Reddit, put it: "If Elon Musk buys Twitter, he will be drawn into a painful world." Because he doesn't know what content moderation and free speech mean... Not only won't Musk solve any problems with Twitter, but he'll also take away his energy and time on Space X and Tesla.