Twitter plans $1 billion IPO

Twitter Inc., the microblogging social networking company, plans an initial public offering (IPO) of $1 billion. It has filed a document with US regulators.

Last month, Twitter announced it was planning to go public. This Twitter IPO will be the biggest one in its class since 2012, when Facebook was listed.

According to the filed documents, Twitter has over 215 monthly and 100 million daily active users, spanning virtually every country in the world. Twitter users create about 500 million Tweets each day.

The Twitter IPO aims to raise $1 billion. During the first half of 2013 the company had revenues of $254 million, but made a loss of $69 million.

Twitter has grown rapidly. In 2010, its revenue was just $28 million. Most of the company’s income (85%) comes from ad sales, and 65% of that from mobile telecommunication devices.

Most analysts believe the Twitter IPO will have a good response from investors.

How many Twitter active users are “real”

Jack Dorsey creator of Twitter
Twitter was created by Jack Dorsey in 2006.

However, some analysts question how many of twitter’s 215 million active monthly users are “real”. In the Wall Street Journal, Tom Gara describes how after the Twitter account for Mashable sent out its 60th tweet of the day, more than 400 other Twitter accounts copied and pasted Mashable’s message within 15 minutes.

Gara goes on to explain that many Twitter accounts consist of robotic spammers and “more cleverly programmed accounts spitting out tweets designed to find their way into the occasional search results or discussion thread.”

Twitter is set up in a way that makes it easy to place automatic postings using third-party applications.

In the document filed with US regulators, Twitter says spammers and robotic accounts make up less than 5% of its monthly active users.

Twitter IPO differs from Facebook’s

In Bloomberg News, Brian Wolmack comments on how Twitter’s document differed from Facebook’s last year. Twitter has included more risk factors and has a much shorter letter to prospective shareholders.

Wolmack wrote “The thing that stands out is that nothing stands out; it’s sort of stunningly boring. This is a really straightforward IPO document, which is maybe exactly what the market needs right now.”

Twitter still making big losses

Although Twitter is among the few companies talked about regarding large-scale online advertising, it is still making big losses.

Despite revenues reaching $317 million in 2012, Twitter made a loss of $79 million. The falling trend in losses from 2011 ($128 loss) to 2012 has now reversed. The company made a $69 million loss during the first half of this year, $49 million higher than during the same period in 2012.

Twitter advertising sales have grown rapidly

  • 3/11 – $11.6 million
  • 6/11 – $13.6 million
  • 9/11 – $19.9 million
  • 12/11 – $$32.6 million
  • 3/12 – $44.5 million
  • 6/12 – $$56.8 million
  • 9/12 – $66.7 million
  • 12/12 – $99.5 million
  • 3/13 – $100.5 million
  • 6/13 – $121 million

Sixty-five percent of Twitter’s ad revenues are from mobile communication devices. Seventy-five percent of its total revenues come from the United States.