Is Twitter Here to Stay?

twitterOne of the biggest stories in the world of investments in 2013 was the public launch of Twitter stock in an initial public offering (IPO). Held for November 7, the IPO was expected to raise in excess of $1 billion for the San Francisco based company. The IPO surpassed even bold predictions, as Twitter shares rose 73% and closed its first trading day at $44.90/share.

Twitter has grown steadily in popularity as a social networking site since its founding by Evan Williams, Jack Dorsey, and Biz Stone in 2006. The series of 140 character micro-blogs allow users to direct short message texts to other users, followers, and friends, and have been used by the Pope (@Pontifex), the President of the United States (@BarackObama), and various famous and infamous Hollywood celebrities (see @amandabynes).

Growth in Popularity of Twitter

Since Dorsey, the current Chairman and Director, sent out the first tweet on March 21, 2006 (“just setting up my twttr“), the company grew from 1 billion tweets sent from then through 2008 to more than 300 billion total tweets, according to the company. In terms of monthly active users (MAUs), an important measure of a social networking sites viability and popularity, Twitter has grown from 30 million a month in March of 2010 to 218 million MAUs as of June 30, 2013.

Twitter is the second most popular social networking website behind Facebook — which boasts over 750 million MAUs — but is nearly as popular as LinkedIn, Pinterest, and MySpace combined (266 million MAUs). In terms of customer satisfaction, Twitter users are more satisfied than users of Facebook or LinkedIn: the site has a customer satisfaction index of 65 (as of July 2013) versus 62 for Facebook and LinkedIn (Pinterest, Google+ and YouTube had higher indices of 71, 71 and 65 respectively).

Can Twitter Sustain Interest?

The company experienced an increase in its revenues in same year-to-year reporting (Jan-Jun 2012 versus Jan-Jun 2013) of 107 percent, or $254 million versus $122 million. The company also reported losses of $70.7 million in 2012 and $133.8 million year-to-date in 2013.

Twitter obviously did fantastically in its IPO, but some analysts warn that the success mirrors the days of the bubble before the 2000 dot-com crash.

One particular concern noted by Twitter in its Form S-1 filing with the U.S. Securities and Exchange Commission on October 3, was that of ad revenue sources for the website. The continuing challenges for Twitter beyond the IPO will be monetizing its 250 million monthly active users and growing advertisement revenues.

MAUs for Twitter grew quarterly from March 31, 2012 to September 30,2013 an average of 12 percent. Monthly growth in 2012 was 13 percent, yet in 2013, monthly growth has been only 5 percent. Slowing MAU growth, recognized by the company and noted in its Form S-1 filing, will require Twitter to look for ways to expand its user base and increase user activity in order to overcome its 2012 and 2013 YTD losses.

What Is Next for Twitter? 

As the IPO release date for Twitter has passed and expectations continue to loom high for this $10 billion corporation, Twitter will need to continue to grow and find new ways to remain relevant with owners and users. Although Twitter is not expected to follow a similar route that Facebook did after it went public, Instagram, Snapchat, and other photo and video sharing networking sites will pose a formidable challenge to Twitter’s dominance as a social networking giant.

About the author: Bill Claiborne is a freelance writer specializing in social media, the internet, computers, gadgets, mobile phones, accessories (including the kensington ipad case), gizmos, futuristic technology and other assorted topics.

 

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