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Twitter's Plunge in Context

Tickers in this article: FB TWTR

NEW YORK (TheStreet) - My biggest takeaway from Twitter's dud of an earnings report is that the company's growing pains, so far, have been relatively painless when contrasted to Facebook .

Shares in the company, after all, have only plunged to lows seen about two months ago in mid-December. Put another way, shares are double the price of the company's initial public offering just three months ago.

So now seems like a good time to add a bit of context to Twitter's first quarterly earnings report and its wild-ride in public stock markets.

That no long-term shareholders in Twitter since its IPO have lost money in the company seems to me like a minor miracle. In some sense, Twitter's relatively small-sized initial public offering now appears to have been a smart and cautious move by the company, which deserves a bit of praise.

If Twitter's closest comparable is Facebook, then the company is also in the midst of a scandal-free first year on public stock markets that could augur well for investors over the long-term.

Facebook's Sixteen Candles

For those who can't remember past last year, Facebook spent its first sixteen months on the Nasdaq toiling below its IPO offering price of $38 a share, after initial earnings reports cast doubt on the company's ability to engage users on mobile devices and monetize that traffic. Because Facebook had conducted a $16 billion IPO at a valuation of about $100 billion, there were many, many angry investors.

In the wake of weak initial earnings and a drum of criticism from the business press, Facebook CEO Mark Zuckerberg vowed to prioritize mobile user engagement and the company's efforts to generate advertising revenue off of mobile devices. Acquisitions such as the company's deal for Instagram proved helpful in Zuckerberg's efforts, which he conceded hadn't been a priority of the company prior to its IPO, though it's unclear how much revenue Instagram is currently generating.

Recent quarterly earnings reports have shown Facebook and Zuckerberg are increasingly adept at driving the company's 1.23 billion users onto mobile devices and generating earnings from that activity.

Mobile daily active users reached over 556 million at the end of 2013, a near 50% year-over-year increase. Advertising revenue from mobile devices represented over 50% of Facebook's overall ad revenue, up from 23% in the fourth quarter of 2012.

Shareholders have rewarded Facebook for its success in transitioning to mobility. The company's stock finally eclipsed its $38 a share IPO price in August 2013. Since then, shares have risen over 60% to $63 a share, putting Facebook's stock market capitalization at over $160 billion.

Airwaves are no longer dominated by angry Facebook shareholders. In fact, given Facebook's share price recovery, Morgan Stanley's  CEO James Gorman recently did a bit of a victory lap on Bloomberg TV . That's after the firm was excoriated by the press sand investors for its underwriting efforts and sued by some state regulators.