Twitter Inc (TWTR) vs. Facebook Inc (FB): A Comparison Of IPOs

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Twitter recently disclosed its IPO filings to the public, and with that, comparison to Facebook Inc (NASDAQ:FB)’s IPO has started in full swing. However, from the details of the IPO filings of both companies, it can be gathered that Twitter and Facebook are very different from each other despite being from the same industry, says a report from Forbes by Mark Rogowsky.

Twitter Inc (TWTR) vs. Facebook Inc (FB): A Comparison Of IPOs

Stock performance or ratings cannot be given until the IPO is issued and price per share is known, which will only be disclosed at the time of issue. However, the pre-IPO stage of both companies can be discussed to mark similarity, as well as differences between them.

Facebook well ahead in terms of revenue

In terms of revenue, Facebook Inc (NASDAQ:FB) was largely ahead of Twitter before going public. Facebook revenue was 10 times more than twitter. In the quarter before filing for an IPO, Facebook posted $1.13 billion in revenue, whereas Twitter posted $139 million. Twitter’s total revenue for the last four quarters comes in at $390 million, and there are expectations that the value of the company will be at $15 billion or more at the time of issue.

Though both Facebook and Twitter derive big chunks of revenue from their ads, it is not the sole revenue driver. Facebook earns its revenue from payment mostly related with games, and Twitter rakes in revenue from its data business.

When Facebook went public, it was not earning mobile revenues compared to Twitter, whose 65 percent of revenue is contributed by ads from mobile. This may again raise questions on the future growth prospects of Twitter.

Twitter has a small user base

At the time of filing its IPO, Facebook’s monthly active user base was 845 million, while Twitter’s is at 218 million. Considering the number of years Twitter has spent in the industry, this can be discouraging.

Facebook acquired Instagram before the issue of its IPO to ensure that it remains the leader, and no other company clinches its dominant position in terms of sharing photos and other stuff. Twitter also made a big acquisition in advertising firm MoPub, which will help the microblogging site get more advertisers.

Growth rate slowing

After the Facebook Inc (NASDAQ:FB) IPO, growth of the company declined, although some was due to seasonal factors. It discouraged the investors. Stocks have, however, revived from the lows as investors have understood that user base expansion has remained almost stagnant, but the social network has been successful at increasing revenue. Twitter revenue performance is, however, good and every quarter the company is performing better than the previous, but the growth rate is declining here, too. Performance in the March quarter was almost the same as in December, which should not be the case with hyper growth companies. Rather, the growth curve of such a company should be exponential.

Facebook Inc (NASDAQ:FB) shares were the sure shot success given its massive user base, and is still profitable compared to Twitter, which is losing money and has not yet posted profit even on the higher revenues.

Concerns can’t be ignored

Twitter’s IPO issue is not expected to hit the $100 billion value as was the case with Facebook during its IPO. But the market watchers expect the launch to be a big one.

Facebook is much bigger than Twitter, a fact that cannot be ignored, so a comparison between the two is not truly justified. However, the concerns regarding the growth prospects of Twitter can not be negated, especially at a time when the company is going to public to raise money.

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