10.9_BlogPost_3

Twitter has had little difficulty attracting users and investors since being founded in July 2006. Often described as a social network or microblogging service, Twitter can be a bit difficult to define. Many people use Twitter to stay on top of their entertainment news, but its uses go far beyond that.

Users are limited to 140 characters in their tweets, which forces users to be concise and encourages communication that is both quick and high volume. There may be no better social media platform for tracking recent trends, following unfolding events, and interacting with friends, strangers, and businesses of all sizes.


While users have been tweeting a ridiculous number of tweets for years, turning that huge user base into a profitable business has been more difficult. The answer for Twitter, like many media companies new and old is advertising. Over the past few years Twitter has been expanding its advertising offerings to business of all sizes.


Recent analysis indicates that Twitter will bring in advertising revenue of about $600 million this year with that growing to $1 billion dollars next year. Although Twitter now undeniably is getting some good revenue, it still hasn't become profitable, although it has plenty of funds in the bank.


On October 3rd, Twitter filed with the SEC to go public. According to that filing Twitter has over 200 million monthly active users and on average over 500 million tweets are posted each and every day. Twitter's announcement, though not unexpected, caused much excitement, and some investors even tried to jump the gun.


The company has already taken in over a billion dollars in investment money since its founding. Evan Williams, one of the founders of Twitter, currently owns 12% of the company. William's stake is expected to be worth $1.2 billion when Twitter does go public (which would make the company worth $10 billion). Some more optimistic financial analysts expect the share prices to trade at a level that would make the company worth nearly $20 billion on paper. Compared to LinkedIn and Facebook, which both trade at about 20 times their sales, that $20 billion would be right in line.


Keep in mind that the IPO still hasn't happened, and Twitter's stock is still not publicly traded. However, the announced choice of the stock ticker symbol TWTR caused a company with the symbol TWTRQ to see its stock soar. TWTRQ was the symbol for TWTR Inc. (all that remains of the defunct Tweeter home entertainment chain). To avoid future confusion TWTRQ has been changed to THEGQ. But the “Q” at the of “TWTRQ” should have been a good cue to investors that this was a stock to avoid, as a “Q” at the end of a stock symbol typically indicates a company is in bankruptcy proceedings.


All this hoopla tells us that Twitter is an arena that many businesses cannot afford to avoid. In addition to the paid advertising options of promoting accounts, tweets, and trends, the free organic advertising opportunities through word of mouth are immense. Pair that with the ability to interact quickly and easily with current and potential customers across town and across the globe, and you have a can't miss opportunity. As Twitter's IPO nears the interest and volume will only increase, so get tweeting today!