To The Moon

The general rise of the American social sector continues. Since the beginning of the year,$Facebook(FB)$ The stock price has risen by 27.26%,$Twitter(TWTR)$ Up 29.77%,$Snap Inc(SNAP)$ Up 24.77%,$Pinterest, Inc.(PINS)$ It only rose by 5.86%.

Benefiting from the economic recovery and the growth of advertising demand, the advertising business revenue of social platforms rebounded in retaliation in 2021. The financial reports of Facebook, Twitter, Snap and PinterestQ1, the four major social stocks in the United States, all exceeded expectations, which led to the surge of the whole social sector. The upcoming Q2 financial report is expected to continue the strong performance of Q1.

The main risks are reflected in two aspects: First, the high base in the same period last year; Second, the impact of the change of Apple's privacy policy on these social platforms began to appear.

Twitter: Q2 or DAU growth low, ushered in the "honeymoon period" in the second half of the year

Looking back at the first quarter, Twitter$Twitter(TWTR)$ 2021's first financial report in fiscal year 2021 performed poorly. Although its revenue and EPS exceeded market expectations, its daily active user mDAUs was slightly worse than expected, and its user growth showed fatigue ahead of schedule, and it will still face a difficult comparison in the same period in the next few quarters. After the Q1 financial report was released, its share price dropped by 11%.

Bloomberg analysts unanimously expected Twitter's second-quarter revenue to be $1.058 billion, and the adjusted EBITDA was $204 million, which was basically consistent with management expectations.

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Twitter, as a traditional social media platform, has the biggest challenge of peaking user growth on a month-on-month basis, but mDAU still has a 20% year-on-year growth, slightly inferior to other peers. Last year, the epidemic greatly improved user activity, but Twitter will face difficult comparisons from the second quarter. It is expected that the growth rate of mDAU in the second quarter, the third quarter and the fourth quarter will still show low double-digit growth, and the growth low point may appear in the second quarter. Bloomberg predicts that mDAU will increase by 11% year-on-year to 204.5 million in the second quarter.

Compared with Facebook, Snap, Pinterest and other peers, the gap between Twitter users will only get bigger and bigger. The company can only hope for the recovery of popular sports events and product improvement to improve user participation. Long-term investors want to see the company's new successful monetization methods and efforts. Just recently, Twitter launched two major subscription services:

• Early June: Twitter launched "Twitter Blue", a subscription service for content creators. Subscribers will be allowed to withdraw tweets, and a customizable timer of up to 30 seconds can be set to withdraw tweets in time when they need to be modified.
• In mid-June, Twitter launched the long-rumored "Super Concern" function, which adopts paid subscription, and paid users can view the exclusive tweets of stars who have opened "Super Concern".

In addition, India's restrictions on Twitter and Nigeria's ban have added some uncertainty to international users. After all, India is one of its top five markets, and Nigeria has about 40 million Twitter accounts, but this is unlikely to have a substantial impact on the future direction of the company.

Looking forward to the second half of the year, Twitter is a typical event-driven media platform. With the gradual recovery of large-scale sports events, such as the European Cup, the Olympic Games and the 2022 World Cup, it will support the activity of users to some extent. After the epidemic, it is a rare "honeymoon period" for Twitter.

In addition, in the first quarter, the change of advertising identifier (DFA) on Apple iOS platform did not bring pressure to the advertising of this platform, and the impact will gradually appear in the second quarter.

Snap: EBITDA turned positive for the first time

Snap$Snap Inc(SNAP)$ is undoubtedly the leader of social platforms, and its revenue has maintained a high growth rate of more than 60% for two consecutive quarters, which greatly exceeded analysts' expectations. The growth rate of revenue and daily active users in the last quarter reached a new high in three years.

Bloomberg unanimously expects Snap's second-quarter revenue to be 844.9 million US dollars, a year-on-year increase of 30%; Under Non-GAAP, EBITDA was US $1.8 million, which turned positive for the first time.

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The advantage of Snap lies in its attraction to the younger generation of users. "Millennials" and "Generation Z" are the core users of Snap, and the high stickiness of young groups promotes the DAU growth of 22% to 2. 5% year-on-year in the first quarter.800 million. In the second quarter, due to the high base last year, the growth rate of users declined. Bloomberg expects DAU to increase by 14% year-on-year to 290.6 million in the second quarter.

In terms of regions, Snap users have expanded faster in other parts of the world except the United States. Now, the number of Snap users in other parts of the world has exceeded the number of users in the United States, which has become the main contributor to the growth of users. Whether the growth of international users can continue is also a major attraction in the second quarter.

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It is worth noting that the average revenue per user (ARPU) of Snap in other parts of the world is only 16% of that of ARPU in the United States, which has great room for improvement, reflecting the potential of Snap monetization overseas.

In terms of valuation, the market selling rate of Snap is 25 times. Compared with Pinterest, which is 16 times, the price of Snap is definitely not cheap. Despite the increasingly fierce competition from peers for user time and advertising, Snap, with its loyal user base and continuous product innovation, will promote the expansion of profit margin in the global monetization process, and finally achieve long-term profit.