Twitter Building Buzz for IPO
The move came after other social media companies’ stock prices such as Facebook and LinkedIn reached new all-time highs last week.
So what does Twitter have to offer the investing public? The confidential filing means the company’s annual revenue is under $1 billion. The announcement did not specify when the S-1 was actually filed but market research firm eMarketer estimates the company reaching $950 million in sales in 2014.
Estimates pinpoint the timing of the IPO to early 2014 because of a couple of recent developments. There are reports of CFO Mike Gupta negotiating with banks earlier in September to handle the IPO and the company’s acquired a couple of media and advertising companies recently. Mashable thinks Goldman Sachs will be the lead underwriter.
Analysts are valuing the company anywhere between $9 billion–14 billion and debate whether the popular social media platform is a good investment. Its recent focus on generating revenue is comforting news, but the size and growth of Twitter compared to other Internet companies like Facebook has others concerned.
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Twitter has established itself as a popular social tool, says analyst Nate Elliott of Forrester Research, but marketers aren’t fully satisfied with the results they get from Twitter.
“More than 60 percent of U.S. marketers are now on Twitter,” Elliott stated. “But there’s still work to be done if Twitter wants to become a viable business.”
Elliott stated Twitter was able to sell promoted tweets and trends without upsetting users, which critics weren’t sure was possible, and it has better measuring tools than competitors like Facebook.
“The company still has to improve its ad targeting and find additional ad formats to sell. If this move helps them grow the business faster and focus on those challenges that’ll be good news not just for Twitter but also for the marketers who use the site,” Elliott stated.
Advertising on Twitter currently means buying a promoted tweet, trend, or account. A promoted tweet displays your message to users who do not already know you, targeted with keywords. The marketer is charged to put up a promoted tweet but Twitter isn’t paid until users engage by either “favoriting” or retweeting the ad.
Twitter’s list of trends shows what topics are currently most talked about and a promoted trend lets an advertiser pay to put up a topic for $200,000 a day. Promoted accounts let users pay to have their Twitter accounts recommended to other users.
Twitter recently announced the acquisition of MoPub to enable real-time bidding and better-matched advertisements.
According to a Market Probe International survey, over 70 percent of Twitter users said they became more disposed to buying from a small- or medium-sized business (SMB) after following the company on Twitter.
Alan Appelbaum, CEO of Market Probe International, said he envisioned real-time bidding could be useful for SMBs going forward
“Based on the research we’ve conducted for Twitter to date, we would anticipate the company will experience substantial growth in ad revenues moving forward, particularly among smaller and mid-size businesses,” Appelbaum wrote in an email.
AddShoppers tracks purchases made on websites and determines which social media site the referral comes from. It said Facebook accounted for 28 percent of the sales and Twitter for 22 percent.
Twitter currently estimates it has 200 million active users, out of the 550 million plus accounts registered. About 40 percent of Twitter users prefer to read rather than tweet and are therefore not inactive said a Twitter representative.
Supporters of Twitter place more value in the percentage of users highly engaged, which according to Pew Research nearly doubled every year since 2010, even while the number of new users grew slower.
Consumers are more engaged with social media advertisements rather than text and Twitter has been experimenting on this front as well. Vines, Twitter’s six-second video application, has signed up 40 million users in only seven months.
The company is working increasingly with TV as well. Twitter has a deal with ESPN, where the network posts videos of highlights on Twitter in exchanged for promoted tweets, and says 32 million people post on Twitter while watching TV in the United States.
Twitter also recently bought Bluefin, a TV analytics company, and Trendrr, which tracks real-time TV trends.