Even after the disaster that was the Facebook Inc (NASDAQ:FB) IPO in 2012, investors are still hungry for a piece of new and innovative technology companies. Twitter, rather strategically, waited until Facebook shares were thriving before announcing its own public offering. The company filed an S-1 publicly last Thursday.
Investors who are looking to invest in the Twitter IPO have a lot to be careful of. After the crash in Facebook Inc (NASDAQ:FB) value, along with the crash of other big Tech IPOs in the last year or two, research is incredibly important. Baird Research analysts Colin Sebastian and Rohit Kulkarni have a new report on the merits of the Twitter IPO.
Twitter IPO: Top Tips
Here’s a look at the most important factors contained in the Baird report:
Twitter is still in its growth phase.
The above chart shows the total number of people using Twitter in the years leading up to the company’s initial public offering. It’s clear that unlike Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG), Twitter user numbers are still growing at a quick rate.
Whether or not this trend will continue is difficult to tell, but it makes Twitter at once more attractive and more risky. Fast growers are likely to have more users in the future, but they’re also more likely to lose users quickly. When Facebook Inc (NASDAQ:FB) user growth leveled off, investors breathed a sigh of relief.
Twitter is for teenagers
Twitter is a very popular social network, but it is increasingly being used by the young. The above chart shows the usage figures for teenagers and everyone else over time. The gap is growing and its clear that Twitter is for young people. Twitter is a data collecting and analyzing company, and teenagers have a good deal of disposable income.
Revenue At Twitter
The above chart shows how much revenue Twitter brings in, and where that revenue is coming from. Twitter will not be mature at IPO and its revenue is still small compared to the competition. The company is still growing, however, and the IPO is designed to give the company the money it needs to boost its ad design and its use of big data.
Twitter and Facebook competition
The Twitter IPO will be plagued with comparisons to Facebook Inc (NASDAQ:FB), and not just about the offering itself. The two companies offer incredibly similar services, and Facebook has emulated Twitter’s in-feed advertising strategy for its mobile offerings. Going ahead, there will be a battle between the two firms. Facebook has many more users, but Twitter has a couple of advantages up its sleeve.
Twitter IPO and the future of advertising
Twitter will go public under the (NYSE:TWTR) ticker. The IPO will take place in the coming months, but there’s a lot of work to do before then and in the months after. Advertising on Twitter may be different than on other social networks, and the company has a couple of important differentiating factors already.
Twitter is able to figure out who is who by looking at the data on followers and tweeting patterns. The company utilizes this information to boost the efficacy of its advertising. The second screen strategy that links Twitter advertising with television is a vital part of that data use. Advertisers can combine television and Twitter advertising to meaningfully increase reach and longevity.
When Twitter has more money available to it, it will be able to leverage its data collection to an even greater extent. The Twitter IPO will give the company the money it needs to invest in this technology.