Twitter Vs. Facebook: A Tale Of Two IPOs

From Facebook Co-Founder and CEO Mark Zuckerberg’s mouth to Twitter‘s ears: The long awaited, much anticipated Twitter initial public offering is upon us.

Zuckerberg offered some cautionary advice Wednesday at TechCrunch Disrupt SF 2013 for Twitter when and if the microblogging site decided to go public:

I’m kind of like the person you would want to ask least about how to make a smooth IPO. As long as they (Twitter) kind of focus on what they are doing, then I think it’s wonderful.

Zuckerberg admitted that Facebook’s first year trading as a public company was “turbulent.” When its stock price fell below the $38 offering price, the young CEO said his concerns ran to people becoming demoralized and leaving. Instead, he said employees became “really focused on the mission.”

Perhaps the area where Facebook can offer the best advice is mobile, as the social network went from seeing no revenue on mobile one year ago to having mobile represent more than 40 percent of its revenue today. Zuckerberg said:

We took a lot of shit because we weren’t making money on mobile.

Wall Street and investors have taken a warming to Facebook. Shares recently hit a record high, and the stock closed at $44.75 per share Thursday.

Here’s a look at both companies’ IPOs by the numbers:

  • Twitter: The microblogging service filed its prospectus, or S-1, with the Securities and Exchange Commission using a provision of the Jumpstart Our Business Startups Act, or JOBS Act, which allows the company to keep its initial filings confidential if it has less than $1 billion in annual revenue. TechCrunch estimated that the value of the firm will be between $15 billion and $20 billion at the time of the IPO.
  • Facebook: Facebook’s S-1 filing revealed that it was looking to raise $5 billion, and the firm had an estimated value of $100 billion on the day of its filing.
  • Twitter: Twitter claims more than 200 million monthly active users who create more than 400 million tweets each day.
  • Facebook: The social network had 845 MAUs at the time of its IPO last May. Its filing also revealed the salaries of executives, including Zuckerberg’s $500,000, Chief Operating Officer Sheryl Sandberg‘s $300,000, and Chief Financial Officer David Ebersman’s $300,000.
  • Twitter: Twitter, like Facebook, is primed to exploit the rapidly growing mobile market.
  • Facebook: Facebook went from zero to 40 percent of revenue generated from mobile in just one year.
  • Twitter: Most of Twitter’s revenue comes from a type of advertising known as sponsored tweets. Brands pay for tweets to appear in users’ feeds just like any other tweets. eMarketer said Twitter’s ad revenue for this year could be as much as $600 million.
  • Facebook: Most of Facebook’s revenue also comes from a variety of paid ad offerings. One type, known as sponsored stories, appear as posts in users’ News Feeds that can be liked. Facebook generated some $1.09 billion in ad revenue last year.
  • Twitter: Facebook and other tech firms have helped set the stage for the Twitter IPO.
  • Facebook: Its IPO was marred by technical malfunctions and a falling stock price, losing billions of dollars in market capital before it recovered.
  • Twitter: Twitter will trade on the New York Stock Exchange.
  • Facebook: Facebook trades on Nasdaq.
  • Twitter: Twitter’s underwriter is Goldman Sachs.
  • Facebook: Facebook’s IPO was underwritten primarily by Morgan Stanley.

So far, the tone and tenor of the Twitter IPO is in sharp contrast to that of Facebook, which was breathlessly covered by the tech media, marking every twist and turn. Much of the coverage of Twitter’s IPO will be speculative, due to the confidentiality clause in the JOBS Act, but the tech community will still be wild with anticipation.

In order for Twitter to continue growing, they must refine and continue improving their ad product. They also need to move into new networks and become the place people think of to go when they think mobile advertising.

Maybe Twitter should heed these words of wisdom from Zuckerberg:

Sometimes it might take the market a little while to catch up and see the results of what you are doing.

Readers: What are your thoughts on Twitter’s impending IPO?

Image courtesy of Shutterstock.

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