Twitter Heads IPO
Twitter, a social media phenomenon that has taken the world in a frenzy, announced recently that it intends to enter the stock market world very soon.
The legal filing, that was made confidentially, was a welcome move for many prospective investors and was revealed most naturally — by a tweet from company insiders.
Twitter CEO, Dick Costolo, spoke at a conference on “AllThingsD” last July, when he compared the numerous queries about the IPO to sports — where he saw himself as one football player earnestly trying to catch a pass, while some groups of people from the bleachers are yelling, “Where will you be after the game?”
It is most likely that the reason why the IPO came about, was because like the other social networking site, Facebook, Twitter already had numerous private investors that government regulations now require for it to go public. The Jobs Act of 2012, mandates that US-based companies have to go public if it has 2,000 plus private investors.
In interviews made with Costolo recently, he said that he is against the “short-term thinking” basis of looking at revenues. Twitter had filed privately, which suggests that it has revenues below $1bn. Under the provisions of the Jobs Act, companies with earnings below $1bn per annum can file secretly; companies with revenues higher than that figure would have to file publicly.
Once the documents for the IPO filing are revealed, it will shed light on the most highly speculated question in cyberspace – What would comprise Twitter’s enigmatic plan to make tons of money for its investors?
Twitter claims a robust number of users of around 200 million that sends more or less 400 million tweets everyday – where around sixty percent of these numbers are made via mobile devices like smart phones.
Despite its apparent reach, many find it difficult to estimate corporate revenues. When the investment company, BlackRock bought stocks of Twitter, on January this year – it was bandied to be worth about $9bn; four months later, estimated revenues had the numbers at around $10.5bn, according to sources from the camp of the GSV Capital Corp.
None of these figures are likely to be seen when the IPO debuts soon. Most companies as a business strategy, merely sell lesser than 20% of their values when they offer themselves in public offerings.
Twitter must have started its IPO into motion the past year, when it acquired a number of companies to strengthen its hold on the tweets market.
Twitter is one of the last media companies to go public. Other big firms like – Linkedin and Facebook, have already jumped in and commanded billions of investments in the public markets. The estimated worth in stocks of Linkedin is $32bn, while Facebook's is $108bn.
Mark Zuckerberg, the co-owner of Facebook, was asked recently at a Tech Crunch conference for any advice that he can give for Twitter on its forthcoming IPO. He said, “The process involve in an IPO is not really that awful."
Twitter will take on the heat , to come up with doable ideas on how to generate an income stream. One observer said that it could probably take a cue from Facebook, which introduced advertising into the social media portal stream, and successfully increased its revenues several times over.
"The price of the stock on initial offering should be based on something more concrete than a couple of dreams," said Roger Kay, who is the concurrent founder of the Endpoint Technologies Associates. He added, "If they introduce ads in Twits, it is going to change the twitting horizon. They have not yet broached the idea on the use of ads, and they may face user resistance because of it."
If the bright boys of Twitter, can find a workable business application, some pundits believe that the company will have a more doable strategy in zeroing its ad efforts to businesses, instead of the highly volatile consumer market.
“Twitter has recently tried to woo the marketers, by introducing the "Twitter Cards," which enables tweets to show both text and bigger photos and video at one click” said Nate Elliott, an analyst at Forrester Research. This feature is oftentimes used in marketing campaigns that advertisers used most frequently on Twitter to showcase their clever flyers at a single click.
Twitter is also wooing companies that place advertisements on television to use the site as an alternate screen, where users can tweet about television and current news in real time. Elliott had noted further that the endeavor was not successful in money terms, but revealed the willingness of Twitter to take innovative ways on how to further generate an income stream for the company.