Microblogging service Twitter on Thursday filed for an initial public offering and should debut on the stock exchange in November. The firm aims to raise as much as $1 billion under the TWRT ticker symbol.
The public IPO filing offers some clear insights into how the social media giant is performing financially. For example, Twitter reported $254 million in revenue in the first two quarters of 2013.
That's more than double the year-ago period. But the company also reported a $69 million net loss in the first half of the year. Nevertheless, analysts expect a massive IPO.
A Revenue Model That Works
We asked Marcus Nelson, Founder & CEO, Addvocate, a social enablement platform, for his thoughts on the big news. He told us there's a reason Twitter has evoked such a big surge of expectation -- and it's not just because of the recent rally of technology stocks.
"It has everything to do with Twitter proving their new-media model that appeals to broadcasters of all sorts, second-screen conversationalists, branding agencies and politicians," Nelson said.
"Twitter has a revenue model that works. Unlike Facebook, Twitter was birthed on mobile. That's a huge differentiator resulting in 200 million rabid users digesting over 1 billion messages every week. Users have accepted a simplified ad platform that also happens to deliver results to advertisers."
Millionaires in the Making
Meanwhile, Twitter CEO Dick Costolo and two of its co-founders, Evan Williams and Jack Dorsey, could collectively be worth as much as$3.7 billion after the company's IPO, according to a Wealth-X calculation that is based on a top-end valuation of $20 billion that has been widely reported by the media.
Twitter co-founder Williams, who has a 12 percent stake in the company before the offering, is poised to be the largest beneficiary from the IPO. Wealth-X estimates that Williams' personal fortune would grow to nearly $2.4 billion if the company is valued at $20 billion. Williams was Twitter's CEO until 2010, when current CEO Dick Costolo took the helm. Williams is now working on developing a publishing platform, Medium, which is dedicated to long-form content.
Twitter co-founder and chairman Dorsey has a 4.9 percent stake while Costolo holds 1.6 percent. This means their gain from the Twitter IPO could be $585 million and $189 million respectively if the company is valued at $20 billion.
"Twitter's IPO announcement confirms that being a self-made entrepreneur is one of the few strategies available for acceleration of becoming a billionaire and adds another notch of success to the New York-based venture capitalists in Silicon Alley," said Davis S. Friedman, president of Wealth-X, a database of intelligence on the ultra wealthy. "Twitter's valuation demonstrates that it truly has become the interest graph. However, it's still too early to see if its monetization strategies on the advertising side will prove successful."