By: Shandesh Chaudhary Topics: Get Web Traffic
How Much Twitter Earns Per Tweet
How Twitter’s value compares to Facebook and LinkedIn
How Much Co-Founder Jack Dorsey Stands to Gain
How Twitter’s IPO will be Different than Facebook’s
Whether or Not to Invest
21 Things to Know as Twitter Goes Public
Evan Williams, Founder and Former CEO – holds 12%
Peter Fenton, Board Member – holds 6.7%
Jack Dorsey, Founder and Chairman – holds 4.9%
Richard Costolo, Current CEO – holds 1.6%
Twitter’s going public today, November 7th, 2013.
There’s been a lot of excitement leading up to the biggest Internet IPO since May 2012, when Facebook went public. That day was a nightmare for Zuckerberg and Co., as widespread demand caused glitches that left investors unsure whether or not their transaction went through. Facebook’s stock suffered, but has been skyrocketing for the last 12 months.
Will Twitter follow suit? Nobody knows for sure – but the financial world has been abuzz with speculation ever since Twitter’s IPO filing last month. The SEC filing revealed previously secret information, like exact revenue and growth numbers. Twitter excitement has reached a frenzied level in the last few days. Investor interest has spurred last minute price hikes up to $26 per share and it’s been reported that banks underwriting the IPO have received so much interest they’ve had to close their books.
All this for a company that hasn’t ever turned a profit? I get into the juicy details of Twitter’s highly anticipated IPO below.
What You’ll Learn:
#1 Revenue is Real and Growing
Twitter revealed that they’ve already earned $422 million in the first nine months of 2013. That’s more than double their revenue from the same period the year before. They’re on pace to make over $600 dollars in 2013.
Twitter’s sales are projected to rise 53% next year to $950 million according to an estimate from the company’s bankers.
#2 But Twitter has Never Seen Profit
In 2011, Twitter lost $128.3 million dollars. In 2012, they cut that number down to $79.4 million. Since it’s inception in 2006, Twitter has lost a whopping $418.6 million.
The good news is that revenue growth is outpacing expenses by a factor of three. According to the Wall Street Journal, between 2010 and 2012 Twitter’s revenue rose 1,021% and expenses rose only 311.5%. Still, they aren’t expected to see a profit until 2015.
#3 Almost All that Money is Coming from Ads
“We generated 85% and 87% of our revenue from advertising in 2012 and the six months ended June 30, 2013, respectively.”
– Twitter, in IPO Filing
As of now, “substantially all” of those advertising dollars come from three sources: promoted tweets, promoted trends, and promoted accounts.
In the future, more of that money may come from inline advertisements. Twitter is also looking to boost their ad revenue in the coming years by becoming more visual and more mobile.
#4 75% of Active Twitter Users are Mobile
According to the IPO, three out of four Twitter accounts are accessed through a smart phone or tablet.
This bodes well for Twitter, given the rise of mobile web. According to Salon, global mobile advertising revenue nearly doubled from $5.3 billion to $8.9 billion from 2011 to 2012.
#5 But Only 65% of Ad Revenue comes from Mobile
Twitter makes less money from their mobile users and that’s something they’ll be looking to improve upon as they make a push for profitability in the coming years.
#6 Twitter has 230 Million Active Monthly Users
If Twitter’s users were a country, it would be the fifth most populous in the entire world – between Indonesia and Brazil.
#7 About 25% of Twitter Users are American
Twitter was founded in San Francisco, but today the vast majority of Twitter users live outside the States. 49.2 million Americans use the service compared to over 169 million internationally.
Of those international users, about 15 million live in the UK. With a population of about 63 million, that means almost one in every four people in the United Kingdom use Twitter. In the US, that figure is lower (about 1/6).
#8 They’re Sending 500,000,000 Tweets Each Day
That amounts to 5,787 tweets per second.
#9 For Every 1000 Tweets, Twitter earns about 75 cents
The numbers are higher in the US, where Twitter gets $2.17 per 1,000 tweets. Internationally, it’s a paltry $0.30 for 1,000 tweets.
This an important lesson in online business. All people are created equal, but some web visitors are worth more advertising dollars than others. Targeting an audience in the United States or other affluent nations will result in higher earnings per visitor.
#10 There are More Tweets than People
Since 2006, there have been over 300 billion tweets. That makes the world population of 7.12 billion people look pretty measly in comparison.
According to Twitter’s IPO filing, they’re growing at a rate of 35% in the US and 47% globally. This trend is expected to continue, as global markets are significantly less saturated.
#12 Twitter’s Stock Ticker will be TWTR
Simple and to the point, this ticker is reminiscent of the company’s original name: twttr.
#13 Twitter’s IPO Values the Company at $18.3 Billion
That may seem like a lot for a company that’s never turned a profit – and it is. But it’s still about quite a bit less than the value of LinkedIn ($26 Billion) and Facebook ($120 billion).
#14 Demand for Twitter Stock has been High
“Banks underwriting the IPO told investors that the order book closed Tuesday morning, earlier than expected.” USA Today describes this as “a bullish sign.”
Initially, Twitter was going to be selling its shares at $17-$20. But after receiving a warm pre-IPO response from investors, that on Monday, November 4thTwitter raised the price to $23-26 per share. Finally, the night before their market debut, Twitter settled on the high-end: $26/share. That means they stand to raise about $2.1 billion from the sale.
#15 Twitter’s Selling Less of Itself than Facebook
Twitter’s IPO is the biggest Internet IPO since Facebook, but it’s still much smaller than it’s social media rival. Facebook sold 421 million shares at $38 each. Twitter is selling only 70 million shares.
Fewer public shares means that the IPO will not raise as much money, but it’s also safer and ensures a higher degree of control for the existing owners.
#16 Former CEO Williams Stands to Gain Over $1 Billion
Here are some notable Twitter stockholders:
Jack Dorsey ownership of Twitter will be worth well over a half billion dollars.
#17 Current CEO Richard Costolo’s Salary is Just $14,000
Don’t shed any tears for the guy: he made $11.5 million in 2012 and his stock is estimated to be worth about $200 million.
#18 Twitter will be Traded on NYSE
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