With IPO looming, Twitter takes on losses, wary investors
In wake of Facebook's tumultuous IPO, Twitter needs to come out strong
Computerworld - As Twitter plans to launch its initial public offering amid financial losses and in the wake of Facebook's tumultuous IPO, the company needs to reassure potentially nervous investors.
"These numbers are going to make investors at least a bit skeptical to be sure," said Dan Olds, an analyst with The Gabriel Consulting Group. "They're going to want to see Twitter's plans for generating a bunch more revenue without driving up costs."
In an S-1 filing with the U.S. Securities and Exchange Commission, Twitter gave users and potential investors their first look under the hood, noting business specifics like user growth, revenue and losses.
While the company said that it's worth about $9.7 billion, according to an internal valuation, what was most noticeable was Twitter's losses.
The micro-blogging site has been steadily losing money, reporting a net loss of $79 million in 2012 and a $69 million loss for the first half of this year. On the positive side, the losses were less than the $128 million it lost in 2011.
Also on the positive side, Twitter generated $317 million in revenue last year, almost three times what it made in 2011, according to its IPO documents.
The company is also on an upward trend regarding its number of users. In the second quarter of this year, the company had 218.3 million active average monthly users, a 44% jump from the same quarter in 2012.
The company will need to get Wall Street and potential individual investors to focus on its growth potential rather than its financial losses. That is even more true since many potential investors may still feel the sting after Facebook's highly anticipated IPO didn't go as planned, leaving investors and financial analysts wary of another high-profile social networking company coming up on deck.
"I really do believe that investors give each company a proper evaluation and will make their decisions based on Twitter performance, not what happened to Facebook," said Brian Blau, an analyst with Gartner. "That said, they will be watching as I think the troubles on IPO day for Facebook were unexpected, and no one wants to see that happen again."
Despite its financial losses, Twitter has positioned itself well. With its user base growing, the company also has become a household name far beyond technology circles.
Many television shows put related hashtags on the screen, encouraging fans to tweet about an episode. During this year's Super Bowl , for instance, viewers cracked jokes, supported their teams and ranted about bad plays or call on Twitter and they watched the game.
- Twitter brings the data back in-house with Gnip buy
- Twitter crashed -- again -- on Tuesday
- Twitter's slipping user growth spooks investors
- Get ready to tweet your questions for Twitter's first earnings call
- Super Bowl sets Twitter record, as Volkswagen launches social war room
- Perspective: Twitter's success opens up IPO pipeline
- Update: Twitter goes public at $45 a share
- With IPO cash influx, Twitter could be bigger threat to Facebook
- Ahead of IPO, Twitter shines up multimedia image
- Twitter kicks off pre-IPO investor roadshow
- Path Selection Infographic Path Selection Infographic
- Hyperconvergence Infographic A wide range of observers agree that data centers are now entering an era of "hyperconvergence" that will raise network traffic levels faster...
- Preparing Your Infrastructure for the Hyperconvergence Era From cloud computing and virtualization to mobility and unified communications, an array of innovative technologies is transforming today's data centers.
- How WAN Optimization Helps Enterprises Reduce Costs If you wanted to break down innovation into a tidy equation, it might go something like this: Technology + Connectivity = Productivity. Productivity...
- Cloud Knowledge Vault Learn how your organization can benefit from the scalability, flexibility, and performance that the cloud offers through the short videos and other resources...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users? All Social Media White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!