How an IPO Could Change Twitter

Twitter is readying an IPO.

“We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale,” read a Sept. 12 Tweet posted by the company. (AdAge offers a comprehensive explanation of what it means for a company to “confidentially” submit an S-1.)

“Now, back to work,” it Tweeted a few minutes later.

The big question—besides when the company will actually go public—is how Twitter may change in response to Wall Street’s unending pressure for ever-larger revenues and profits. An IPO would certainly infuse the company with cash, allowing it to pursue bolder initiatives and perhaps engage in a few big-ticket acquisitions. But that aforementioned need for growth could also drive Twitter to layer its user interface with more ad units—something that (as other social networks such as MySpace have demonstrated) doesn’t always go over well with the core audience.

Over the past few months, Twitter has been hard at work expanding its tools for advertisers and others who depend on the social network for business. In June, it opened up its analytics dashboard—previously reserved only for advertisers—to account-holders interested in peering into data related to their timeline activity and followers. That’s in addition to launching video, music, and photo apps that could all increase Twitter’s utility as it seeks to battle Facebook, Google Plus, and other social networks for users’ eyeballs and clicks.

The confidential filing suggests that Twitter is making less than $1 billion in revenue; but the fact that it filed for an IPO in the first place suggests that its revenue (and possibly profit) are on the upswing. Twitter’s recent $350 million acquisition of MoPub, a mobile-ad exchange, could help it mine gold from Twitter aps on smartphones and tablets—but that all depends on the sort of advertising the company chooses to pursue. If there’s the perception that Twitter is taking liberties with user privacy, such as giving excessive amounts of personal data to advertisers, it could lead to all sorts of negative publicity; and if Twitter floods its pages with tons of ads, it could lead to a MySpace-style exodus of users. In other words, from here on out, Twitter will need to walk a very thin line when it comes to leveraging information (and layering on ads) for profit.

 

Image: Twitter

Post a Comment

Your email address will not be published.