Following the Facebook IPO disaster, all eyes in the financial and Social Media worlds were on Twitter’s recent IPO announcement. Initial estimates of its potential value once trading commences ranged from $12.8b to $20b.1
After their initial confidential filing to the Securities & Exchange Commission (SEC), they followed up with an amended document (apparently based on the SEC’s immediate feedback on several areas). Analysts for investment firms and financial news outlets (and marketers) have taken an eager deep dive into the documentation. And what did they find? A lot we suspected, a lot we didn’t know and a glimpse into the growing presence/value of mobile usage and advertising spending.
Twitter itself valued its stock at $20.62 per share and sources hint that 620 million shares will available. Based on that data, at least one investment firm estimates Twitter may reach $1.2b in revenue in 2014. If so, its value would be 28.6 times its sales revenue (for reference, Facebook trades at 20 times its sales and LinkedIn around 21 times its sales).2
As marketers and advertisers, we’re most concerned about ROI. Does the IPO contain any nuggets of interest for us? The short answer to this question is “yes.” Unlike Facebook at the time of its IPO, Twitter is more mobile-centric and has been for some time. It’s estimated that advertisers are spending $8.3b annually marketing to mobile users worldwide (2012), and that will only grow exponentially (some estimate as high as $33.1b by 2015).3
In their IPO, Twitter reveals that an amazing 65% of their revenue is from mobile (Facebook had 0% at the time of their IPO). As the world continues to become more mobile-centric, Twitter is well suited to reap the benefits. For potential investors, and advertisers, that’s good news because something else stood out in their report. They have never shown a profit in their seven years of existence. In fact, they lost $79m in 2012.4
So the future of Twitter depends on how you view the data. If you’re an optimist, you’ll see a year-over-year revenue growth, mobile-focused engine of success that will turn a profit in the end. Pessimists will be wary about making such a gamble based on the report’s details. Only time will tell, but it looks like Twitter will be hard at work building their subscriber base, admittedly smaller than Facebook, and moving into a profitable zone.
Other learnings from their IPO5:
- Revenue has doubled due to increased advertising
- 75% of Twitter’s most active users used their service on a mobile device in Q2 2013 (up from 66% in Q2 2012)
- 85% of revenue comes from advertising revenue (15% data licensing)
- 65%+ of advertising revenue is generated on mobile device users
- Has 215m users, of those 100m+ are daily users who send 500m+ Tweets/day
- 49m of their overall users are in the US
- Will trade, upon approval, under the symbol TWTR
- One of the founders of Twitter, Ev Williams, owns 12% of Twitter and will likely become a billionaire upon IPO approval
- Twitter’s plan is to be a publicly traded company before Thanksgiving
References:
1, 2, 3 Twitter’s Valuation Seen Exceeding $20 Billion After IPO
http://www.bloomberg.com/news/2013-10-07/twitter-s-valuation-seen-exceeding-20-billion-after-ipo.html
4, 5 Twitter’s revenue numbers reflect general shift of web from desktop to phone
http://www.pbs.org/newshour/bb/business/july-dec13/twitter_10-04.html
