Twitter Wants Investors to Focus on Revenue Growth, Not Net Loss, Ahead of IPO
Twitter has filed paperwork for an Initial Public Offering (IPO) and there are some staggering numbers for potential investors to consider. The ones Twitter hopes they'll focus on the most are the figures detailing its revenue growth over the past few years. For example, Twitter's revenue in 2012 was $316.9 million, triple the amount from a year prior. And in the first half of 2013, Twitter posted revenue of $253.6 million. Pretty gnarly, right?
Well, the flip side is that all that revenue is still adding up to a net loss. Despite pulling in $253.6 million so far this year, Twitter posted a loss of $69.3 million. Twitter is hoping potential investors will ignore the losses and focus on its ability to generate money, especially since the numbers were right in line with what analysts had been expecting.
Brian Wieser, an analyst at Pivotal Research Group, called the losses a "non-issue," adding that "It would have been a surprise if they had a profit," according to Reuters.
Even so, there's plenty of risk for an IPO that's likely to be the biggest since Facebook went public in 2012. Chief among them is Twitter's heavy reliance on advertising revenue. Ads made up more than 87 percent of its revenue in the first half of 2013, and the prices Twitter has been able to get advertisers to pay has dropped over the past five quarters.
"Advertisers will not continue to do business with us, or they will reduce the prices they are willing to pay to advertise with us, if we do not deliver ads in an effective manner, or if they do not believe that their investment in advertising with us will generate a competitive return relative to alternatives, including online, mobile," Twitter stated in its IPO filing.
According to Bloomberg, Twitter's documents suggest the company is worth $12.8 billion, though some analysts believe it might be as high as $15 billion. That's significantly less than what Facebook debuted at, however Twitter is drawing just as much attention.
Well, the flip side is that all that revenue is still adding up to a net loss. Despite pulling in $253.6 million so far this year, Twitter posted a loss of $69.3 million. Twitter is hoping potential investors will ignore the losses and focus on its ability to generate money, especially since the numbers were right in line with what analysts had been expecting.
Brian Wieser, an analyst at Pivotal Research Group, called the losses a "non-issue," adding that "It would have been a surprise if they had a profit," according to Reuters.
Even so, there's plenty of risk for an IPO that's likely to be the biggest since Facebook went public in 2012. Chief among them is Twitter's heavy reliance on advertising revenue. Ads made up more than 87 percent of its revenue in the first half of 2013, and the prices Twitter has been able to get advertisers to pay has dropped over the past five quarters.
"Advertisers will not continue to do business with us, or they will reduce the prices they are willing to pay to advertise with us, if we do not deliver ads in an effective manner, or if they do not believe that their investment in advertising with us will generate a competitive return relative to alternatives, including online, mobile," Twitter stated in its IPO filing.
According to Bloomberg, Twitter's documents suggest the company is worth $12.8 billion, though some analysts believe it might be as high as $15 billion. That's significantly less than what Facebook debuted at, however Twitter is drawing just as much attention.
