Twitter plans to raise $1 billion during their Initial Public Offering in these coming weeks. The social network is rumored to be listing on the New York Stock Exchange with the “TWTR” ticker. The most interesting details lie in the company’s S-1 form that was filed for the Securities and Exchange Commission on Oct. 3.
Anyone knowledgeable about the market will cringe at yet another social platform going headlong into a potentially disastrous IPO in lieu of Facebook’s messy entry.
For those unaware, Facebook’s IPO led to investors losing nearly $40 billion in the first month. The Wall Street Journal labeled it a “fiasco.” However, in their S-1, Twitter drew a line in the sand: these are two very different businesses.
The microblogging network tallies 218 million monthly active users with only roughly 100 million of them participating on a daily basis. Facebook records 1.19 billion monthly active users and 699 million daily users respectively. Twitter recorded $316.9 million in revenue in 2012, and looks to be doing even better with $253.6 million in the first six months of this year. Facebook generated $1 billion in revenue leading up to their IPO last spring.
So, if Facebook was a catastrophe with impressive numbers like those, why does Twitter think it can succeed? It’s a mobile-heavy conversation catalyst, media channel and brand escort. 75 percent of Twitter’s traffic is mobile based, with 65 percent of its ad revenue generated by mobile users. In contrast, Facebook topped out at 41 percent in its most recent quarter after priorities shifted entirely to mobile after their failed public offering last year.
The prospectus was a fairly straight forward document describing the stock as risky, but supporting its decision with gusto. Despite the $316.9 million in revenue that Twitter gained last year, the social network recorded a net loss of $80 million. Why? Acquisitions.
Since the company’s inception in 2006, it has proven to be thirsty for startups primarily in the mobile and ad spaces. There have also been a few tendrils in other aspects of social media, namely Vine and We Are Hunted, which became Twitter Music. This includes the acquisition of the power user dashboard TweetDeck for a slick $40 million in early 2011. Not to mention the acquisition of Bluefin, a social TV service, for $80 million in February of this year and coding company Crashlytics for $100 million in January.
“We have incurred significant operating losses in the past,” Twitter said on page 23 of its S-1 form. “We may not be able to achieve or subsequently maintain profitability.”
The company knows of its risks, but also states how it sets itself apart from every other platform. For the first time ever, the S-1 quotes tweets from famous personas to help illustrate its versatility – something that Facebook cannot attain. President Barack Obama used Twitter to first publicly announce his victory in last year’s election. A local resident in Pakistan unknowingly reported the raid on Osama Bin Laden via a tweet before the U.S. government presented the news to the public. Even NASA’s Mars rover updated the planet on its findings via photos and status updates in the form of tweets.
Twitter isn’t the old and graying grandpa in the social media world that Facebook is, but is just now spreading its wings to leave the nest. With a new deal recently finalized with CBS that allows bit-sized segments from “60 Seconds” and “CSI,” among other cornerstone programs, to be delivered to all of our timelines, Twitter is bringing a blitz on its attempt to increase cross-platform promotion and marry TV and Twitter.
The platform isn’t even “mainstream” yet, but with everything finally lining up, CEO Dick Costolo and Chairman Jack Dorsey may weigh in big come IPO time.
Brandon Painter is a senior in marketing. Please send all comments to firstname.lastname@example.org.