As Zynga (NASDAQ:
) buyout rumors persist and Facebook (NASDAQ:
) continues to struggle after a nearly damning initial public
offering (IPO), Twitter executives have become acutely aware of
the tough social media market the company will be joining if it
does in fact decide to go public.
As he slowly guides Twitter towards becoming a publicly traded
company, Chief Financial Officer Ali Rowghani will have to do
everything in his power to make sure the social media
conglomerate does not feel the effects of Facebook's rocky stance
in the market. The premiere "social network" is currently trading
around $20, down nearly 47 percent year-to-date.
According to Bloomberg
, Rowghani is in position to face a huge challenge; determining
what price Twitter should go public at so as to not endure the
same fate that Facebook has experienced this year.
"Twitter will probably be the biggest consumer-Web company to
make a market debut since Facebook, which has lost half its value
since May 17, when it went public with too high a price set by
its finance chief, David Ebersman, along with advisers,"
Bloomberg reported early Tuesday morning.
"Rowghani will need to set Twitter's price high enough to
secure the funding Twitter needs without giving it a loftier
valuation than it deserves."
But Facebook is not the only precursor to what might be a
difficult journey for Twitter's IPO. Social gaming company Zynga
(currently partnered with Facebook) has had its fair share of
managerial shake ups, legal quandaries and drops in share price
as well since going public in December 2011.
Following a slew of negative press and currently trading down
nearly 75 percent year-to-date, speculation has begun to swirl
that Zynga will soon consider selling. As investors continue to
note that this may be the company's most promising option, CNN
reported that Zynga would be a pricey purchase for any company
"Zynga has a solid balance sheet, which includes more than
$1.5 billion in cash, and has no debt issues or other pressures
that could force it to sell in the near-term, other than
reported on Monday, just four days after Zynga announced a poor
As Twitter stands on the sidelines watching social media
giants try to gain footing in unknown territory, some analysts
are becoming increasingly optimistic that Facebook will bounce
back from what has been a very difficult year.
Jefferies believes that the company's long-term monetization
strategy is quite attractive, as Facebook plans to attract
advertisers through "Facebook Exchange," while using Facebook
Gifts and Facebook Offers to give consumers time and money saving
If Twitter is planning to one day go public as well, the
company may want to take note of Facebook's efforts to give
investors and analysts everything they expected from the company
to begin with. As Bloomberg reported, Rowghani may be just the
man for the job.
With oversight duties concerning Twitter's international
expansion, along with sculpting the company's advertising
platform, Rowghani may be able to help ensure a successful IPO
for tweeting investors worldwide.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.