An amended S-1 filing with the SEC revealed that Twitter plans to begin trading stock to the public on Nov. 15 under the ticker symbol “TWTR.” Now that we’re less than a month away from this social media giant’s IPO, expect speculation surrounding Twitter’s true value to skyrocket. Facebook’s disastrous IPO is fresh in the minds of analysts, and Twitter faces serious concerns over how many of its users are legitimate and how many are fake personas.
Still, Twitter has emerged as a powerful force in news, politics, sports, and entertainment, and it’s hard to imagine that anything will slow this train down.
A Case Study: Facebook
Few companies seem as prepared to thrive in an increasingly technological market as Facebook, which is why the social network’s free fall in the months following its IPO was so surprising. A share of Facebook cost $38 initially and rose incrementally on day one. Just three months later, Facebook’s public value had fallen by nearly 50 percent. CNN reports a Nasdaq technical error may have been to blame at the outset. After months of losses, however, it was clear that investors might not be as bullish on Facebook as valuers thought.
Twitter hopes to avoid a similar fate when it goes public, and that starts with a sound valuation. Bloomberg.com suggests that the stock may debut at around $30 per share. Facebook’s public offering was ultimately good news for Twitter. After touching a share price low of $20, Facebook is now trading at around $50 per share. Part of that comeback has to do with positive shifts in the stock market as a whole, but there’s no doubt that Facebook has bounced back from early struggles.
Fake Personas Equal Fake Value?
Few have a firm grasp of how many legitimate users frequent the site, which makes valuing Twitter so difficult. In a world where the number of followers, favorites and retweets rules, users have resorted to creating fake personas to boost their profiles. Even the most prominent figures are guilty of hiring fake Twitter followers. Social media management firm Status People revealed the majority of followers on President Obama’s campaign handle (@BarackObama) were fake. Imagine millions of supposed users conjured up from thin air. It’s certainly a red flag for investors, one that’s bound to make investors second guess Twitter’s claim as it boasts 218 million active users.
Security has been an issue for Twitter as well. Hackers are prone to overtake accounts and either spam followers for money or embarrass the real user. Identity security is a growing concern in many facets of life, and if Twitter hopes to continue its meteoric rise, it’ll have to shore up its network.
Twitter Can’t Be Stopped
Despite legitimate concerns, investors still see Twitter as a potential gold mine. In the S-1 registration form, Twitter pointed out that its platform has become the premier place to find breaking news. President Obama announced his 2012 election victory on Twitter. An unsuspecting Pakistani citizen live-tweeted the raid on Osama Bin Laden’s compound hours before traditional news outlets got hold of it. Twitter’s value is evident in the countless ways it has integrated itself within cultures around the world. That influence seems bound to grow.