Kito-Corp.com: Micro-blogging service Twitter’s initial public offering filing with the SEC has provided its customers and those interested in owning a part of the company their first look at its finances.
The IPO is set to be the most eagerly-anticipated in the technology sector since Facebook and, with the stock being pegged at $ 20.62 a share, Twitter is nominally valued at $ 12.8bn if the estimate of 620m shares outstanding is accurate.
“Twitter is a far smaller concern than Facebook and, looking at the books, it has never made a profit even though it generated some $ 253 million of revenue in the first two quarters of this year,” commented an Kito Corp social media analyst.
The Asia-based investment manager concedes that the sheer cachet of Twitter and the hyperbole surrounding the IPO will be enough to see it over-subscribed but believes the company may find it difficult to change its loss-making ways.
“Encouragingly enough,” the Kito Corp social media analyst said, “the company’s financial disclosures show that the lion’s share of its revenue is derived from mobile advertising. Facebook hadn’t cracked that at the time of its IPO in May 2012 so there is room for some optimism.”
Users who access the service from mobile devices are also critical to that growth. About 75 per cent of Twitter’s most active users accessed the service from handheld devices. The ability to make money from mobile users was a big factor in Facebook’s post-IPO slump last year.
The shares fell more than 50 per cent from their $ 38 debut price in May 2012 and didn’t cross back above that level until July of this year — after the company reported an increase in mobile advertising.
Twitter’s filing disclosed that it has 218 million monthly users representing a 44% increase on the same time last year and also that it lost $ 69.3 million in the first 6 months of this year compared a loss of $ 49.1 million in the same period last year.
It doesn’t matter which way you slice it, these numbers are definitely cause for concern for anyone considering holding Twitter stock after the hype has ended,” said the Kito-Corp.com analyst.