the social media service with explosive growth, is due to be
publically traded on the market on Thursday morning. This will mark
one of the most anticipated initial public offerings since the
, and it could also signal an end-at least for now-of the 'hot'
tech names waiting to go public.
Still, many investors are buzzing over the company's launch, as
many social media names have done quite well as of late. The
Social Media ETF (
has actually added nearly 50% this year, so it is definitely a
great time for Twitter to go public (See
Twitter IPO Puts These 3 ETFs in Focus
And interest in the company is already surging in the last few
pre-IPO days, as Twitter has closed its order books a day early,
while the price range for the IPO is now between $23-$25. At the
high end, this would result in a
valuation of $13.9 billion
, though many expect the price to jump once shares actually hit the
Factors to keep in mind
Twitter is already a global force with more than 230 million active
users, and 100 million daily active users, who create close to half
a billion tweets every day (according to the
). This represents a huge growth level, as at the end of March
2012, monthly active users were just over the 130 million mark, so
clearly the interest in Twitter is booming.
Revenues for Twitter have also grown significantly as of late,
though the firm is still losing money.
According to Twitter's S-1
, from 2011 to 2012, revenues increased by 198%, while the first
nine months of 2012 compared to the first nine of 2013 saw a
revenue increase of 106%.
Investors should note that Twitter relies heavily on mobile
advertising to power its business, as this currently makes up 70%
of its revenue. So, effective utilization of mobile will be key to
the company's growth picture, much like what we saw with Facebook
and their earnings earlier in the year.
Twitter does have plenty of work to do on this front, and it must
continue to grow its user base to be effective. The firm is still
very deep in the red, so a great deal more in revenues need to come
out of the capital raised from the IPO in order to make Twitter
There is also a concern over where people using Twitter are
located, and if advertisers are willing to pay to reach the type of
people that are on Twitter. According to the Twitter S-1, over
three-fourths of all Twitter users are from markets outside the
U.S., so a huge question mark is how effectively ads can be sold to
these users (currently just 26% of the revenues come from ads on
these international users' pages).
Either way, Thursday will be an exciting day for technology stock
investors, and those who have been following Twitter for years.
Plus, IPOs have done quite well as of late, especially for
investors who have hung on to these newly minted stocks for quite
First Trust US IPO Index Fund (
has actually moved higher by 78% over the past two years, compared
to a gain in the S&P 500 of roughly 40%. So clearly, a focus on
IPOs has been a winning strategy, regardless of how you feel about
Twitter's prospects going forward.
But the key question remains; will you be a buyer of Twitter on day
one, or will you see how it plays out first?
Or, do you believe that Twitter is all-hype and that investors
would be wise to stay away from this social media company?
Let us know in the comments section below!
And for more coverage on the
, make sure to
at 9:40 (Eastern Time) on Thursday morning, where we will be
special live event
. Our two top social media gurus-Brian Bolan and Tracey Ryniec-will
be laser-focused on the IPO, the social media space, and what
investors should take away from this event. Make sure to tune in!
FACEBOOK INC-A (FB): Free Stock Analysis Report
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