Learning from Facebook: Twitter’s IPO

Since I plan on doing my Ignite presentation on Facebook’s IPO, its stocks trend since then, and relating this to how Twitter prepares for their IPO, and I have done a prior blog post on Facebook’s IPO, I want to take a close look at how twitter’s CFO and the rest of the company prepare for an eventual public offering.  These two companies are very much alike in that they are very popular social networking sites that attract millions.  Facebook is obviously much larger than Twitter, but Twitter is growing rapidly.  In fact, according to a CNN article, it was a Twitter user in Pakistan that broke the news first.  Examples like this show how big Twitter is and how it is becoming a social networking site that connects the world, much like how Facebook does.  Twitter will want to look at reasons why Facebook’s IPO failed and how they can plan for a more successful one.  Twitter’s goal is to go public by 2014, although the company’s CEO has said the IPO is “way out” in the future.  Fortunately for Twitter, the talk about them already is that their IPO will likely be extremely successful, for many reasons.  First, Twitter has seen enormous growth in recent years, and this trend is expected to not only continue, but increase by the time of their IPO, according to this same CNN article, (http://tech.fortune.cnn.com/2012/10/22/twitters-ipo-not-facebooks-will-define-social/) .  “Twitter CEO Dick Costolo revealed that his company had hit 400 million tweets per day, up from 200 million just 11 months earlier. That growth has prompted financial gains, even as the company’s revenue model remains a work in progress. According to research firm eMarketer, Twitter’s revenue will likely hit $288.3 million this year, and then jump to $545.2 million in 2013. By the end of 2014, the figure will soar to $807.5 million.”    Another reason that it is expected they will have a successful IPO and just be a successful business in general is because they have “found a way to monetize mobile users. So-called sponsored Tweets — messages paid for by advertisers — are more easily present on tiny cell phones screens. By 2014, it could generate $444.1 million from smartphones and tablets, according to eMarketer.”  Facebook has not been able to make money from mobile users, which has certainly hurt their stock.  It is clear that Twitter seems to be a company that will have much more success when they go public, it is just not certain yet when this will actually happen.  However long it may take, the company will eventually go public.

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