Edited by Vani Rao
Further to our Twitter IPO story, Twitter has filed an amended S-1 form with the SECon October 17, 2013. Twitter clarified its intension to list its stock on the New York Stock Exchange (NYSE) under the symbol ‘TWTR’.
During its filing, Twitter declared the largest quarterly losses in its history, close to $64.6 million, up 199% from $21.6 million last year same quarter. However, its revenue jumped 105% to $168.58 million from $82.32 million during the quarter.
While Twitter’s losses definitely send a negative signal to investors, it is worth noting that amajority of the losses were incurredas a result ofan increased focus on sales and marketing efforts in the last few quarters. On the positive side, the company is ramping up its sales forces globally to push its advertising platform. The chart below showsTwitter’s growth story with its product innovation and launches.
According to its most recent filing with the SEC,Twitter has over 200 million monthly active users or MAUs,over 100 million daily active users, and approximately 500 million Tweets every day.
Twitter had seen a healthy increase in timeline views worldwide. Timeline views and timeline views per MAU are measures of user engagement with the company.In the last three months, Twitter timeline views in the United States increasedby 33%,whileinternational timeline views increased by 57% during the same period.
Apart from user growth, Twitter has also achieved significant global scale.As of September 2013, Twitter had offices in over 15 cities globally. Moreover, the company is actively looking to tap other emerging companies as well.
Twitter has always been keen on products and technologies. In February 2012, Twitter introduced Promoted Products on iOS and Android mobile applications. Over 70% of its advertising revenue was generated from mobile devices and 76% of its MAUs accessed Twitter from mobile devices. Moreover, Twitter is likely to attract more users and grow exponentially with the growth of Smartphone industry.As per the eMarketer forecast,the smartphone user base is likely to increase to 207 million by 2017 from 121 million in 2012.
Twitter’s growth strategy depends on its penetration in the emerging markets and the expansion of its user base. As per industry estimates, of the 2.4 billion internet users and 1.2 billion mobile users, only 230 million users thus far useTwitter.
The company also plans to continue to develop and improve its mobile applications to drive user adoption of these applications. It willalso acquire new technologies to develop and improve its products and services.
However, the company may face challenges in entering some markets such as China, where access to Twitter is blocked, as well as other countries that have intermittently restricted access to Twitter. Hence, the restrictions or limitations of access to its service Twitter may adversely impact its growth plans.
As per the company’s filing, the fair value of Twitter’s common stock as of August 2013 was $20.62. Considering Twitter’s growth potential, global reach, and its capability to turn on revenue engines faster,WSA expects Twitter to be priced at around $20 billion with a price target of $35.