Elon Musk is very likely to shake up Twitter (TWTR), but that doesn’t mean the social media platform’s main rival Snap Inc. (SNAP) is a stock to be totally forgotten about.
In fact, Musk’s new involvement in Twitter underscores how far behind Twitter is on product development compared to Snap and why the latter’s stock is still an attractive buy pros say.
“It’s so far superior,” Jefferies analyst Brent Thill said on Yahoo Finance Live about Snap’s platform. “We like the innovation, we like the management team.”
Thill has a Buy rating on Snap, and views Twitter as a Hold.
To be sure, the Tesla CEO will be looking to change the views of analysts like Thill.
It was disclosed on Monday that the somewhat unpredictable Musk took a 9.2% stake in Twitter. The stake — valued at close to $3 billion as of Twitter’s closing price on Friday — is defined as a passive one.
Shares of Twitter surged 27% in the session. The stock popped another 7% Tuesday as Twitter disclosed Musk will be joining the company’s board.
Thill thinks the addition of Musk is great, as his impressive track record of product design could go a long way to improving Twitter, driving better ad sales and closing the gap with Snap.
“If I am interested in a particular topic or sports or travel, today there is a lot of noise on Twitter. I am OK with some of the noise. I think some users like that, but there are some users who really want to refine the experience. I don’t think that anyone has been able to get that kind of experience,” Thill explained.
The gap between Twitter’s performance and Snap’s is wide.
Twitter’s sales rose 37% to $5.08 billion in 2021. Snap’s sales increased 64% to $4.1 billion last year.
Shares of Snap have surged 243% over the past two years, while Twitter has gained 121%.
Thill added, “They need to shake things up. Twitter has really been caught in a rut, and they haven’t been innovating at the pace they could.”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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