Don’t know what IPOs are? Ready a quick article about them here.
Though there has not been any official information regarding Twitter’s IPO, there are rumors that the company may go public soon. After Facebook (FB) and Groupon’s (GRPN) stocks suffered heavy losses when going public, is it still worth it for Twitter to do the same?
In terms of public opinion, it would be a good idea for Twitter to go public, as it has become a company which is seen as respecting the rights of users, and leans toward the consumer side of many issues that are troubling similar corporations today. When introducing features which can be used to either improve the user experience or aid in targeting users for specific advertising, both of which are controversial issues, Twitter offered users the choice to remove themselves from being tracked, a choice which put them in a better light then Facebook or Google, which both don’t offer the option to opt out for some of their targeting programs. Twitter has also done actions which may not be in line with the desires of the government or some of their user base, but instead what they felt was right, holding onto information about protesters for numerous causes, earning the trust of many of their customers. The positive feelings created by Twitter have done nothing but help the company’s growth, with users all over the world using the platform to make their issues known, or to create awareness.
Twitter’s financials, or at least the numbers that have been released, show that Twitter is in very good standing, and has a great amount of potential for growth. Insiders are saying that Twitter should hit the billion dollar revenue mark before 2015, a significant amount for the company valued at about ten billion dollars. Also, with only 140 million users on Twitter, the company has a greater amount of room for growth compared to Facebook, who IPO’d with over nine hundred million users. A problem with a Twitter IPO, however would be the 140 character limit. As of right now, this limit is not much of a hindrance to users or advertisers, but if advertisements were to increase in complexity or length, companies would be forced to condense them, possibly losing out on the effect of such advertisements. Currently, in a way similar to Facebook, a significant portion of Twitter revenues come from advertising, something which leaves the company in a position where their stock price fluctuates based on whether marketers continue to advertise. This situation makes Twitter stock less purchasable because of situations like GE’s withdrawal from Facebook, which caused many analysts to think that the end of Facebook’s success was nigh. Though Twitter is in a better situation than Facebbok, the position it currently occupies is not an optimal IPO stance.
Though there have been rumors about Twitter going public, what does the company officially say? The CEO, Dick Costolo, has stated that he does not see an IPO or sale to another company in Twitter’s near future, also saying that the time is currently not right. Insiders have said that there isn’t a chance of an IPO until at least 2014, meaning that we’ll have to wait a few more years to see if all social media stock will be as volatile as Facebook’s and Groupon’s.