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Twitter files S-1 with the SEC
- atwebb 13y ago8 points in 9 minutes... I guess some folks are happy to be cashing out.
- sharkweek 13y agoI find $1BN to be kind of low? I guess they know better than I, but that seems quite a bit undervalued compared to other companies in tech?
- tcoppi 13y agoLoss of almost $80 million on $316 million in revenue, and they're offering $1b... seems like they're asking for a lot when they have very little.
- dm8 13y agoLooks like they are betting on potential. To be honest, Twitter is so mainstream that it is entirely new medium of news/discovery/conversation just like Radio/TV/Internet. I'm sure they will be extremely profitable company in the future.
- umsm 13y agoExactly. It feels like they are not concentrating on their profitability yet. When they do, I believe they will have a lot more income.
- yapcguy 13y agoOh my god. They're bleeding money. If they don't IPO now, how much longer could they last for?
- Touche 13y agoI doubt it. Twitter is fundamentally flawed in a way that I'm not sure is fixable. The fact is that the vast majority of people on Twitter get no feedback at all when they post something. This is a combination of 2 things: 1) Tweets disappear quickly from a user's timeline 2) Most people have few active followers 1 and 2 work against each other to form a negative feedback loop. The result is the vast majority of users use it passively to read celebrity tweets, nothing more. Twitter must know this as their growth is already peaking and they're not making much money. Expect to see more drastic measures to try and turn what they already have into something profitable. They've peaked.
- jedc 13y agoTwitter can have value to people that post nothing. (This is the case for a number of my friends on Twitter.) And what you're describing has existed since Twitter was created as Twttr.
- Touche 13y agoRight, it has value, but that value is not going to go up, is my point. Twitter users don't become more engaged over time because only a small percentage of users can use it the way it is intended.
- foobarqux 13y agoSeems to me most of the value in Twitter is as a broadcast medium for established media entities.
- hayksaakian 13y agoFor only recently opening their ad platform, that's not too surprising.
- tcoppi 13y agoMaybe, but then what is the reason they think this is a good time for an IPO? It seems kind of desperate to my admittedly untrained eye, but it could also be brilliant.
- hayksaakian 13y agoFrom my naive point of view, it seems like now is when they can make their most optimistic projections that could still be taken seriously.
- peloton 13y agoThat's usually a placeholder number. They're going to raise what they can and it will probably end up much higher than $1b in stock.
- 7Figures2Commas 13y agoSalesforce is worth $30 billion and has no earnings. Amazon is worth $143 billion and has no earnings. Facebook, with a ~$120 market cap, is valued at more than 200 times earnings. Tesla's market cap is roughly a third of Ford's. As long as the Fed is easing, fundamentals don't matter. The mispricing in equities is particularly pronounced in prominent technology companies, but there is clear excess throughout the market. The name of the game is momentum. This game will end, and badly, but questioning the market and fighting the Fed has not been the path to profit so keep in mind that, right now, Twitter's bottom line is practically irrelevant.
- 3am 13y agoCome on, don't lump those together. * 75% of CRM's float is sold short, market clearly agrees with you * AMZN has big FCF numbers, 2012 being an anomaly because of the big fixed capex expenditures. They grow the business without regard to engineering their GAAP earnings, which is admirable, and means the EV/FCF is probably a big, though somewhat reasonable 25-50. * FB analysis requires a DCF because they're growing earnings so fast. They're only 40 x estimated 2014 earnings * TSLA is not the same business model as F or GM, though they all nominally sell cars. Look at the leverage around licensing revenue that ARMH or QCOM showed. I haven't read Twitter's S-1 and can't comment on it (50 x revenue makes it feel closer to CRM than any of the others), but I generally agree with your opinion that equities are near a peak because it is literally impossible for fixed income to be less attractive as an alternative and the Fed is clearly letting us know it's closer to the end of QE than the beginning. (disclaimer: nobody should make investment decisions based on my advice, I'm not a professional and you could lose all your money if you do, etc) EDIT: after perusing the S-1 the revenue growth rate is incredible, so it may end up more like FB (which has only surpassed it's ipo price in the last month or so...) EDIT 2: Yahoo!'s short data was laughably wrong, CRM's percent of float sold short is 10%
- yapcguy 13y ago> after perusing the S-1 the revenue growth rate is incredible Well, one could also say that the growth rate of their cost base is incredible too.
- sologoub 13y agoLooking at their adjusted EBIDTA, it looks like they managed roughly the same amount in 2012 as in 1st half of 2013. That definitely shows that they are aggressively driving to profitability. Top line revenue is not looking quite as impressive, but 2012 is shown at $317 million, where as H1 of 2013 is shown at $254 million. If you assume same revenue levels for H2 (no idea if that's a valid assumption), you are looking at $508 million for 2013 or a 60% growth in revenues. Add to this the sentiment comments made by others about how mainstream twitter is, and you definitely have decent justifications for high-ish stock price.
- dev_jim 13y agoAnother lazy post voted to the top on HN that beats the same ole lack of profit drum in a rapidly growing company. Where's the comparison to Apple to really drive home the point?
- dm8 13y agoLetter from founders/company seems to be really short and to the point, just like Twitter itself. No grandiose words but simple mission - "..to give everyone the power to create and share ideas and information instantly without barriers" http://www.sec.gov/Archives/edgar/data/1418091/000119312513390321/d564001ds1.htm#toc564001_12a http://www.sec.gov/Archives/edgar/data/1418091/0001193125133... Key numbers: Revenue for first 6 months till June 2013 - $253.6 million with net loss as $69.3 million
- nashequilibrium 13y agoWhy does Jack Dorsey only own 4.9%?
- deleted 13y ago[deleted]
- chollida1 13y agoProbably due to this... http://venturebeat.com/2011/09/08/twitter-400-million-round/ http://venturebeat.com/2011/09/08/twitter-400-million-round/ http://venturebeat.com/2011/09/08/twitter-400-million-round/ http://venturebeat.com/2011/09/08/twitter-400-million-round/ > Sources cited by the Financial Times claim DST has invested $400m for a 5% stake in the company, with US mutual fund T Rowe Price and an internet fund managed by JPMorgan leading a group of other investors. I doubt Jack put in an equivalent amount to ensure he didn't get diluted:)
- muzz 13y agoAn investor buying 5% of the company doesn't cause a lot of dilution. Earlier rounds were certainly more dilutive.
- zinssmeister 13y agobecause Jack developed twitter during employment at Odeo, which was the company of Evan Williams and Noah Glass. Eventually they would spin it out. I think 4.9% is a fair stake (when you are not risking everything to make an idea work but rather rely on your current employer to build things up with you).
- negrit 13y agoJack Dorsey only own 4.9% and Christopher Isaac "Biz" Stone own less than 1%, they got diluted pretty bad.
- chollida1 13y agoSee here to see just how much funding they've taken. > http://en.wikipedia.org/wiki/Twitter#Funding http://en.wikipedia.org/wiki/Twitter#Funding
- deleted 13y ago[deleted]
- mikeryan 13y agoIts not necessarily just dilution. If you've got a wildly popular but not-profitable startup you'd take money off the table at every funding round as well....
- colmvp 13y agoNaive question, but how is such a large disparity between the number of shares that Williams has over Dorsey considering they're both Co-Founders?
- bitops 13y agoWhoever has the best lawyer?
- saalweachter 13y agoIn addition to the guess of someone else (one founder could have cashed out more or less during different funding rounds), it's also possible that one founder was an investor in subsequent rounds.
- mbell 13y agoThe founding of Twitter was a bit of a mess. This is just my understanding of it, is most likely at least partially wrong and is certainly missing details: Williams and Noah Glass founded Odeo which did podcasting, Williams was the CEO and the initial $. Dorsey / Stone worked for Odeo. When iTunes added podcasting, the writing was on the wall for Odeo. A small group inside Odeo started working on other ideas, one of which was twitter. This group was (depending on who you ask) Glass, Dorsey and a contractor, Florian Weber. After getting the soft public release up, Glass wanted to spin out twitter as a separate company. Then some unknown stuff happened, Williams fired Glass, founded a new company called Obvious Corp with Dorsey, Stone and some others. Obvious Corp (Williams' $) bought out the investors of Odeo, thus acquiring all it's assets, including twitter then spun out twitter and sold off the assets of Odeo to a third party. Interesting interview with Noah Glass here: http://www.businessinsider.com/twitter-cofounder-noah-glass-2011-4 http://www.businessinsider.com/twitter-cofounder-noah-glass-...
- aaronbrethorst 13y agoWe anticipate making capital expenditures in 2013 of approximately $225 million to $275 million Our users create approximately 500 million Tweets every day Over 65% of our advertising revenue was generated from mobile devices in the three months ended June 30, 2013 our advertising revenue per timeline view was $0.80 As of June 30, 2013, we had approximately 2,000 full-time employees. Conspicuously absent in the list of acquisitions is Atebits, Loren Brichter's company, from which Twitter for iPhone was derived.
- nknighthb 13y agoI'm guessing they're listing acquisitions in the previous 3 years (3 years tends to be a magic number in finance, securities, and tax lookback periods; don't ask me why, probably hysterical reasons). The atebits acquisition was >36 months ago.
- aaronbrethorst 13y agoInteresting, thanks for the data point.
- iradik 13y agoCost of a tweet = 1/10 cent = $225,000,000 / 500,000,000 * 365
- saym 13y agoFor those of us with limited IPO watching experience, what other companies have gone public with a negative bottom line? Another question: will the infusion of capital from going public drive them towards profitability? What is there plan to become profitable?
- zinssmeister 13y agoMarketo I believe.
- apaprocki 13y ago> what other companies have gone public with a negative bottom line? I just casually checked on the Bloomberg and it seems fairly common. Just in the US and just in the past 12 months I see hundreds.
- minimax 13y agoHundreds of IPOs in the past 12 months?
- etrain 13y agoThis is incorrect.
- apaprocki 13y ago2013 YTD there have been 886 "equity offerings" on US markets, which includes all types. If I narrow it down to Initial Public Offerings there are 233. If I narrow it down further to only Common Stock, there are 186. If I narrow it down further to those with negative net income, there are 83. So I wasn't being very precise originally by narrowing it down to IPO of Common Stock, but there are still a lot with negative income.
- minimax 13y agoThanks for following up!
- kilroy123 13y agoI find it interesting how low their revenue is. With Twitter being so popular, you'd think they'd be above 1 billion in revenue. Goes to show you how hard it is to monetize some products.
- dcpdx 13y agoThey've only just started ramping their monetization engine as they've only been offering paid solutions for a few years now. They get all their revenue from essentially two products: promoted tweets and promoted accounts, so I see their revenue as pretty impressive given their simplistic offerings. They're now trying to get a piece of the $85B/year TV ad industry in the US too, so expect to see revenue start to come in from a variety of sources. For those criticizing Twitter because the majority of its users are a passive audience, remember that TV is in the same boat and commands the lionshare of ad spend globally. There's a lot of potential here, and they are just scratching the surface with what's possible.
- kilroy123 13y agoThat's what I was thinking. If a tv network had as many views as twitter, it would be doing very well. I'm assuming, no tv network gets as many eye balls per year?
- akanet 13y agoIt appears that the offering price has been censored from this document: To the extent that the underwriters sell more than shares of common stock, the underwriters have the option to purchase up to an additional shares from Twitter at the initial public offering price less the underwriting discount. probably due to whatever act allowed Twitter to file without public scrutiny up-front.
- matthewmcg 13y agoActually, this is because the underwriters are still pricing the deal by assessing potential market interest. Companies have always been able to amend their registration statements to fill in pricing details. See http://en.wikipedia.org/wiki/Red_herring_prospectus http://en.wikipedia.org/wiki/Red_herring_prospectus
- akanet 13y agoAh, noted, thank you. I hear the whispers among institutional investors is 11bn
- resu 13y agoIt's interested that they chose NYSE of NASDARK(DAQ). Facebook IPO trauma?
- knodi 13y agoIt really comes down to how good the sales pitch was.
- pbreit 13y agoNASDAQ no longer "owns" the tech world. I'd say it still has the edge but it's much more balanced now than it used to be. Some notable recent tech IPOs on NYSE: LinkedIn, Pandora, Trulia, RingCentral, Violin Memory, Fusion IO.
- tanzam75 13y agoPandora and Zillow just wanted the ego boost from having a single-letter ticker symbol.
- pbreit 13y agoZillow is on NASDAQ. The symbol customs have changed as well. NYSE symbols were typically 1-3 characters while NASDAQ were 4. But of course we know FB and Z are now on NASDAQ (and LNKD on NYSE).
- tanzam75 13y agoThanks for the correction. So I'm curious -- do NYSE and NASDAQ have an agreement not to assign the same ticker?
- tareqak 13y agoIs the SEC open in the midst of the shutdown?
- capex 13y agoSomewhat tangentially, I feel Twitter sort of stopped innovating after they got big. If Google as a search engine can do Gmail, Glass and driverless cars, why has Twitter made tweeting the only business they do?
- eric_cc 13y agoI guess I don't have an issue with a company that tries to do one thing really well.
- jusben1369 13y agoAgreed.
- stonemetal 13y agoThey got big but they haven't gotten profitable. I could see branching out and taking risks if they had profits to invest. Without profits branching out is a distraction from not dying.
- nostromo 13y agoBy buying Crashlytics and MoPub they have branched out a bit.
- muzz 13y agoThere was an article comparing the lack of innovation between Twitter and Facebook. One of its most salient insights was that Facebook's product was the vision of the founder, whereas Twitter was almost an accident, and thus there is a "don't screw it up" mentality at Twitter that limits product innovation.
- deleted 13y ago[deleted]
- rgbrenner 13y agoMight want to click on the link and scroll down to the financial statements. Twitter lost $70 million during the first half of this year. In fact, they didn't make a dime in 2010, 2011, or 2012 either. I don't think I need to post Google's profits for comparison. One is a vibrant growing company. The other is struggling to stay alive. One has billions to invest in new ideas. The other needs to raise money before they burn through it all just doing what they already do. Twitter doesn't have a dime to invest in new ideas, unless that idea solves the profitability problem they already have. And btw, for all that google has invested in, they are still an advertising company - 98% of their revenue. They make a bit off gmail from ads (I assume), but they haven't made anything from glass or driverless cars. This is hardly the type of innovation that Twitter needs.. where is the money going to come from for what are essentially research projects.
- deleted 13y ago[deleted]
- rdl 13y agoWow, they fall below what I thought the required threshold for going public now was ($500mm/yr revenue). I guess the assumption is they could scale their revenue fairly comfortably.
- rgbrenner 13y agoIt looks like they are at $450m for the past 12 months (ending june 30), and are on track to pass $500m this year, even assuming no further revenue growth for the rest of the year.
- AznHisoka 13y ago"According to the filing, Twitter has 250 million monthly active users, 100 million of those are daily active users." I'm not a Twitter insider, but I've been crawling Twitter users for a service I'm building. Based on my experience I think the number is closer to 25 million, not 100 million, and even that is pretty generous if we're talking about DAILY active users.
- harryh 13y agoYour crawls probably only surface people who create tweets. Lots of people read twitter on any given day without creating anything.
- icpmacdo 13y agoDo you account for private accounts? I am not trying to say that there are 75 million of them I am just curious. If so what percentage of user are private accounts?
- robszumski 13y agoI'm mostly interested in the non-financials in the document. On the top of the list is this: "We have implemented a disaster recovery program, which allows us to move production to a back-up data center in the event of a catastrophe. Although this program is functional, we do not currently serve network traffic equally from each data center, so if our primary data center shuts down, there will be a period of time that our products or services, or certain of our products or services, will remain inaccessible to our users or our users may experience severe issues accessing our products and services." One of the most technically advanced software companies is still operating a single critical datacenter instead of many at once?
- ollydbg 13y agoProbably legacy infrastructure.
- richardwhiuk 13y agoYou'd be surprised how many large organizations don't have fully functioning disaster recovery scenarios. Operating active/active is really hard for lots of applications, and having a spare data centre is hugely capital intensive, for little headline benefit.
- peterjs 13y agoI can't help myself, but Twitter seems to me like a subset of Facebook. Something like ICQ, AIM, or Yahoo Messenger is to Facebook Chat or Skype. It came at the right time in the US, but it takes some time for these things to get abroad. While it arrived to Central Europe, Facebook had enough users and introduced features like Followers etc. Today, Twitter is solely used by a marginal tech/hip/geek community here. And advertising goes where people go. The question is, whether this evidence suggests that the Twitter of today can't compete directly with Facebook, and it's success is based on acquiring users before FB matched it in functionality. How stable this user base is? Is it a similar case as with the chat applications? Anecdotal evidence - a friend of mine just asked, whether one should invest in Twitter... on Facebook.
- radical_vamsi 13y agoFair question to ask! Although would agree with 'subset of Facebook' argument but therein also lies its beauty. If we look at Facebook today and filter marginal things away its used primarily to 1) Share updates and 2) Share pics. Twitter took the first point and made it better. Instagram took 2nd point and made it better. Both did well. So sometimes (in fact most of the times) its about taking only one feature and doing it extremely well and I will give credit to Twitter for this. As for the question related to a stable user base is concerned it feels people will find usage for both kind of platforms, general ones and very specific ones!
- RockyMcNuts 13y agoAt the risk of stating the obvious, Twitter is a directed graph (one-way follow), while Facebook is (mostly) undirected (two-way follow), I have to friend you and you have to agree. Twitter is more for the digerati, Facebook is more for the masses. Facebook has more of a mission to capture and monetize all your social/personal info, Twitter is a little more narrowly focused.
- cantbecool 13y agoWhat's the average time between filing the S-1 with the SEC and then being listed on the stock market?