When Twitter Inc. is racing toward the largest Silicon Valley IPO, the eight-year-old online messaging service company gives potential investors their first glance at its financials.
(Above Image by Annetta Shaff)
According to market analysts, Twitter’s IPO will be the biggest since Facebook Inc’s 2012 IPO that made Mark Zuckerberg a billionaire.
Company Worried About Volatile Online Advertising Market
Though Twitter reported rip-roaring revenues, its losses have continued over the last years. In its first public disclosure of financial figures, the company revealed that revenue almost tripled to $316.9 million in 2012. Whereas in the first half of 2013, it posted revenue of $253.6 million, the company’s losses stood at $69.3 million.
A major issue for Twitter is that the online advertising market is volatile and competitive as it is still new and several other companies are coming up with the solution. According to the company advertisers will not continue to do business with it or they will reduce the prices they are willing to pay to advertise with it, if it does not deliver ads in an effective manner.
Twitter Inc. believes that advertisers would not come to it if they do not believe that their investment in advertising with the company will generate a competitive return relative to alternatives, including online, mobile. Thus, optimizing the effectiveness by increasing user-engagement is essential for Twitter that it can propose to potential advertisers.
Potential investors may also be concerned about slowing user growth and engagement. Engagement is a major issue for mobile advertiser and according to reports ‘timeline views’ which is a measure of how many times a user refreshes his or her stream of tweets has one up by 10.7 percent in the second quarter to almost 151 billion.
Memories of Facebook’s Disappointing 2012 Debut Haunting
According to some market analysts as Twitter Inc. is inching toward the year’s most highly anticipated IPO, the below par debut of Facebook Inc. is haunting the company. Last year, Facebook had a disappointing debut; however, now it is doing better which may inspire Twitter Inc. to go ahead.
Twitter may go public some time before Thanksgiving has not yet determined pricing. Investors may be wary of the IPO as they have learned from Facebook’s last year disappointing debut. Some skeptics even say that investors are suspicious about the actual Twitter users as it is going to determine the quantum of revenues later on.
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