Twitter’s IPO is one of the most talked about since Facebook’s, and the microblogging service has hopes of a smooth transition. Twitter filed its S-1 prospectus, a company’s first public offering documents, detailing plans for going public. According to bloomberg.com:
“Twitter Inc.’s initial public offering documents suggested a valuation of $12.8 billion for the microblogging service, underscoring the seven-year rise of a still unprofitable company that has helped revolutionize how people share information.
“In the most anticipated technology offering since Facebook Inc, San Francisco-based Twitter made public its S-1 prospectus yesterday and said it’s seeking to raise $1 billion. Twitter pegged the fair value of its common stock at $20.62 a share in August. There are 620 million shares outstanding, according to people familiar with its financials, who asked not to be named because the number was not included in the filing.”
With the revenue that Twitter is earning, that valuation may be a little high. From a price-to-earning ratio standpoint, it would be a little higher than Facebook’s and twice as high as LinkedIn’s.
Since the company is now going public, it has to make certain information available, giving interesting insight into the company. As reported by abcnews.com:
“It takes more than cultural heft to build a business, as Twitter is learning. The company has suffered uninterrupted losses of $419 million since its inception. Twitter can afford the losses because it has raised $759 million from investors. The company still had $375 million in the bank at the end of June and hopes to raise at least $1 billion more in its IPO.
“To make money, Twitter will likely get more aggressive about showing ads. In the three months ending in June, Twitter generated revenue of $139 million, or an average of just 64 cents per user. In contrast, Facebook generated second-quarter revenue of nearly $1.2 billion, or an average of $1.58 per user, while LinkedIn posted revenue of $364 million, or an average of $1.53 per user.”
Another important concern for Twitter’s future will be its ability to monetize outside of the U.S., where it’s currently growing the fastest.
Like Facebook, Twitter appears to be one of those tech tools that should be here to stay. But in the fast moving tech industry, nothing stays the same for long; and based on the numbers Twitter filed, it will have to move quickly to turn a profit and stay afloat.
Check out the video above that takes a look into Twitter’s IPO and Diddy’s take below.
