Twitter’s $1 Billion IPO: All you need to know

Hot on the heels of Facebook’s initially disastrous IPO; Twitter filed their $1 Billion IPO yesterday – trading under the name of TWTR when the San Francisco company goes public. As a company which has struggled to find new streams of profit; how successful will it be?

During the first six months of 2013 the company pulled in $253.6 million in revenue, but its net loss increased by 41% to $69.3 million.

Luckily there are two statistics which give a more positive outlook...

  • Firstly, only a third of its users are in the US – so there’s plenty of room to grow.
  • Secondly, 65% of revenues come from mobile advertising – beating both Facebook and LinkedIn.

Speaking from an avid user of all the main social networks (yes, even Google+) perspective; Twitter has an issue to overcome in terms of advertising. Whereas Facebook is engrained into the majority of people’s lives – and can get away with hideous advertising – Twitter doesn’t have the luxury.

When talking to users, many were prepared to leave over Twitter’s new API rules (albeit a necessity to secure future revenue, and control the experience.) If Twitter decided to pile in adverts – more than the “promoted tweets” system used currently – users will quickly switch to an alternative.

In fact the biggest threat is influential figures switching to any upcoming niche service, such as those dedicated to the likes of; world leaders, celebrities, athletes, or journalists.

The first product launch outside of (but integrated with) their main Microblogging network is Vine; an app which has grown exponentially in popularity recently – with popular brands even launching marketing campaigns on the short looping video service.

Currently there’s no obvious income to Vine; but with rival Instagram launching similar functionality – Twitter is not likely to add in advertising until their competitor does (which is soon.)

So how much value does each user hold for Twitter? They haven’t announced directly, but some maths from Quartz shows $0.55 in the quarter that ended in June. This is compared to Facebook’s $1.41 of average advertising revenue per user over the same period.

Whilst Twitter can’t boast the big profits of Facebook; it can boast about the users with 100 million accessing the service every day and posting 500 million tweets – my own maths skills say that equates to an average of 5 tweets per day per user.

The IPO is hoping to raise $1 Billion, with the biggest benefiter being Ev Williams, who owns 12% of Twitter. Peter Fenton owns 6.7% of the company. Co-founder, Jack Dorsey, owns 4.9% of the company. And CEO Dick Costolo owns 1.6% at the bottom-end of the scale.

What do you think of the rise of Twitter and the launch of its upcoming IPO?

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