Will Twitter Be Social And Share? IPO Or Be IPO'd
The Twitter IPO rumblings are getting stronger on the Street with the addition of Morgan Stanley banker Cynthia Gaylor as head of corporate development. However, the company insists this has nothing to do with plans for any upcoming IPO for Twitter. The acquisition of Gaylor may really be just about M&A.
Whether or not Twitter is planning an IPO any time soon, lips are sealed at the company. Many investors would like to see the mega social giant hit the street running. Many believe its just a matter of time.
Twitter has been beaten out on any significant acquisitions in the past, such as its attempt at Instagram, which Facebook (FB) snatched up with ease. Twitter has been around for 7 years now, with about 500 million users, its nearly half that of Facebook. Facebook's IPO gave them the ability to access and fall back on greater equity for any future acquisitions, something that Twitter may need in order to expand and compete.
Twitter's platform, though, is much different from that of Facebook. It relies on a “micro blog” type format, giving users the ability to quickly send out 140 character messages to anyone about anything. It is very popular among mobile users, who's membership will only grow in the coming years. It gives anyone or any company (including News distributors) a very fast and effective way of aggregating information at lightning speed.
The hit on Twitter was it's ability to monetize its platform. Most recently, the company came out with full access to Twitter Advertising. What used to be an invitation only capability is now opened up to everyone. It is similar to what Facebook has already set up, allowing anyone to “promote” a post or a “tweet” in this case for a price. This should boost revenue significantly as Twitter is a big favorite among internet marketers.
If you look around the internet at just about any blog or website, you will notice share buttons readily visible. One of the staple share abilities is that of Twitter. “Share this on Twitter!” “Follow Us On Twitter!”
Whether or not it's popularity will be that of Facebook or not, the twitter button will always be seen right along side that of Facebooks “Like” or “Share” button. However many levels of wrong you may see this, “Share and Tweet” is fast becoming the mantra of the next generation. Which shows you how technology can impact the social dynamics of society.
So will Twitter “Share” and do an IPO? And will they be “Liked”?
If were going to sink $80 million into a company, one of the first questions you would ask is “how do I get my money back out?” This was one of the things going through Marc Andreeseen's head when he sunk that much into Twitter back in 2011. At the time, analysts on the street were giving it a $4 Billion valuation. Pressure from Twitter shareholders to go public may be unavoidable.
“The chatter is that (Twitter) is going to do $600 million in revenue this year and a billion in revenue next year,” says Eric Jackson of Ironfire Capital. A common X valuation for social tech companies is 15 to 20 x earnings. That would give Twitter a top side valuation of roughly $20 Billion.
Socializing is a hot and cold industry. Meaning, what's hot today could be old news tomorrow. And Twitter is ripe to get “Liked” on Wall Street at this time. However, do they have a window? Twitter has its thumb on the pulse of the social artery right now, and a bird in hand could be worth many in the bush so to speak. Remember Myspace? They used to be the Facebook of the internet before Facebook, but they lost touch of “social” and got disliked. They will most likely never be remotely close to what they once were.
As long as Twitter doesn't make any major miscalculations, we can expect to be getting tweets for quite some time.