The popular microblogging site, Twitter has finally filed this year’s most anticipated IPO, after the announcement of its confidential IPO via a tweet few weeks back. While the list of valuations still go missing from the filing, the company is looking forward to raise approx. USD 1 Bn with this move.
Also, the founders intend to list the common stock under the symbol “TWTR” and will be offering around 472,613,753 shares of stock in this initial release.
Twitter’s success path, since its inception in 2007, has been a roller coaster ride for its founders. With a lot of popularity and least of revenues, the company’s future remained uncertain, until it started with the concept of ‘promoted tweets’ in 2010, with mobile devices like like tablets and smartphones becoming the prime driver of its business.
Today, as per a recent Forbes report, Twitter is being valued at USD 15 Bn to USD 16 Bn based on buying in the private market. Also, for the first time, the company revealed its financial performance in public. As per the filing, by June 30, 2013, it had already earned USD 253.6 Mn, an increase of 107% since June 30, 2012 while the net loss increased by 41% to USD 69.3 Mn. The total loss had been USD 418.6 Mn since its beginning. The initial offering is thus expected to yield some nice returns to its investors such as Union Square Ventures, Bezos Expeditions, Spark Capital and Institutional Venture Partners.
Till date, the company claims to have 218.3 Mn monthly active users with over 160,690 Mn timeline views. It competes with brands such as Facebook (including Instagram), Google, LinkedIn, Microsoft and Yahoo!, which offer a variety of Internet and mobile device-based products, services and content. Also, it competes against some smaller companies like Sina Weibo, LINE and Kakao, each of which is based in Asia.
As Twitter’s revenues are mostly third party dependent, the SEC filing claims the risk of reduction in revenues, due to lack of advertisers’ trust in future. Also, the differences in the competitive landscape in international markets may impact its ability to monetize products and services.
For example, in South Korea it faced intense competition from a similar messaging service offered by Kakao. Additionally, in certain emerging markets, such as India, many users access Twitter’s products and services through feature phones with limited functionality, rather than through smartphones, its website or desktop applications. This, thereby results in reduced ad engagements in these markets, adversely affecting Twitter’s business and operating results.
However, despite of all these concerns, Twitter IPO seems to be a promised one and the company is expected to reach its estimated USD 600 Mn revenue this year.
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