Analyzing The Twitter IPO

Following the footstep of Facebook, Twitter IPO announcement for its own social media messaging service is causing waves to online.twitter_logo_header

Is it the right time for them to raise the money? The company’s fortunes are on the upswing. According to eMarketer, Twitter will rake in $583 million in advertising revenue for 2013 and touch $1 billion in 2014. Given the projections, it would take the company nothing to win public trust.  So, the timing simply can’t be better. Recent market performance of Facebook and LinkedIn share show that Twitter has got it right. This year, Facebook’s shares are up more than 60% while professional network LinkedIn has gone up to a staggering 117%.

The next question is: when will the IPO happen? Though it’s tough to answer this question one can only hazard a guess by following what Facebook did. Facebook went public in May 2012 after announcing its IPO filing in February 2012. So Twitter might go public anytime between November and December. But many believe Twitter would botch it up by launching it during holidays. So, the launch may happen anytime early next year.

What about the valuation? This is the toughest question to answer. Going by insider reports, the company was to be purchased at around $14 billion when its worth was $11 billion. This puts the value of its share at $27. But Twitter may choose to price it below that.

Interestingly, Facebook had effectively no mobile ad revenue when it went public. In comparison, Twitter makes more money via mobile apps. So, Twitter starts its innings with an advantage of sorts.

Here are the few reasons according to daily finance on why average investor should not get a thrill for twitter IPO.

  1. 1.  We have seen in the past most of the IPO which creates a lot of hype have always dissatisfied the market and average investors. So till the time Twitter comes with good facts, it’s risky.
  1. 2.   Well if you are a regular news reader you must have read a lot about companies uses IPO as a good alternative to raise capital from the market. And many had already shown losses after the listing, thus we should first wait and watch the market and what twitter brings new to avoid such news.

Share with us your views on Twitter IPO.

Bio: Sandra Bullock is working as Editor in Chief for Financeninvestments.com (FNI). Writing on Financial Topics is her passion. FNI is a great Community for financial bloggers and writers.

 

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