Secrets Revealed from Twitter’s IPO Filling
As we all know, the highly anticipated release of Twitter’s S-1 documentation was last Thursday that allowed outsiders access to hard numbers about the business. Their new filings will prove valuable for investors, as until this point, investors have been relying on guesswork. Twitter has estimated its own value at $9.7 billion. If Twitter adds extra shares as it is thinking to, the implied value of the deal could exceed $12 billion. However the major debate for Twitter’s valuation is centered around its projections of future sales and earnings. The primary concern behind this is that Twitter’s international success, while impressive, is still bringing in only a fraction of its overall revenue, i.e. 77% of its users are represent 25% of revenue.
Moreover, the impact of such a factor on Facebook’s IPO in the past also demonstrates the extent to which Twitter’s inability to successfully expand internationally can adversely effect its business and financial condition due to the negative impact it has on revenue per user as seen in Figure 1.
Most importantly, as accidentally revealed by the company’s fillings, Twitter has set the official IPO date to November 15 which investors are concerned about as “the company seems to be rushing into things.”
So the question that arises is whether Twitter is ready to challenge investor concerns regarding the upcoming IPO or will this be a repeat of the Facebook debacle we all saw in 2012?