In 2103, Twitter Inc (NYSE:TWTR) become a publicly traded company after its midwinter IPO. As a publicly traded company the firm would now have to bear the major responsibility of bridging the gap between its revenue and valuation, which has surged substantially, says a report from Venturebeat by Eric Blattberg.
2013, a good run
The micro blogging site has achieved major success in the period of seven years by expanding its user base to 230 million monthly and 2,300 employees. However, the company has still to prove that it is a long term player in the social networking industry.
Trading of Twitter shares began on November 7th on the New York Stock Exchange (NYSE) under the ticker TWTR. The company outperformed Google Inc (NASAQ:GOOG) marginally, raising slightly below $2 billion from the sale of its IPO at $26 per share. On the first day itself, the price of the share rocketed to as high as $49 per share.
Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More
Twitter Inc (NYSE:TWTR) went on to touch as much as $70 per share in late December, and market capitalization stood at $40 billion, but shed 13% on December 27, which was the much needed realization for the bulls on Twitter, says Blattberg.
Twitter need to strengthen fundamentals
From the fundamental perspective, Twitter is not a very strong company as the company reported an approximately $419 million deficit as of June 30, 2013. In the first three quarters of 2013, the company clocked in earnings of just around $500 million and lost $133.8 million. The growth rate in its user base is also declining, reaching 6% in the third quarter, down from 10% in the first quarter.
Investors are confident on the company and are taking bullish perspective. However, Twitter has not been very impressive in the last few weeks, and definitely not good enough to back the high valuation.
Twitter needs to gear up in fiscal 2014 to maintain investor confidence. Primarily the company needs to focus on revenues and user acquisition. Advertising businesses would receive more thrust from Twitter, in 2014, as last year, in February, the company published Ads API, which reflected that the revenue has been generated by the segment allowing the agencies to buy and create ad campaigns on Twitter much more easily. In June, the company added few more partners to attract enterprise level customers.