Twitter has hired a stock administration analyst to prepare financial statements and the S-1 filing when the company decides to go public. Despite this seemingly obvious move, The USA Today reports that Twitter is denying any intentions of a public offering and remaining quiet about the issue. Despite this, many still believe that the social network is going public in 2014.
Staying tight-lipped about the IPO is a good move for Twitter, especially when you look at their competitors who have gone public in the past year – Facebook in particular. It took Mark Zuckerberg’s company 14 months to climb back and hit its IPO price and overall the stock has been unresponsive to major announcements like Instagram video and Graph Search.
Facebook has felt constant pressure to increase revenue since it went public. Unable to charge users for accounts (it’s free and always will be, remember?) the network has tried to increase ads and time spent on site. If people are treating Facebook like a search engine as well as a social network, then they’re spending more time there instead of on Google. If users think Facebook has awesome games then they’re giving up their afternoon to play Candy Crush Saga. The more pages that users click around to, the more ads they’re exposed to and the more money Facebook is making.
The increase in ads has led to grumbling among some users, which is where Twitter should pay attention. Many social networks hope and pray that they never follow the path of MySpace in regard to popularity. The site constantly reinvents itself to draw users back, only to become a further source of ridicule to the tech universe. If Facebook were to decrease in popularity to the level of MySpace, their stock would similarly plummet.
Zynga and Groupon are just two companies that have seen their stocks fall and plateau as their product popularity has decreased. Zynga went public in December 2011 at $10 but hasn’t seen stock prices higher than $5 in over a year. Groupon also went public in late 2011 when daily deals were at their peak. By 2013, the fad had passed due to market saturation and a growing disinterest from businesses. Groupon’s stock price has stayed slightly under the initial $20 offering ever since the launch.
The Internet and social networking is still relatively young, and very few people can accurately predict the length of popularity for various sites. Twitter has made a name for itself by bringing hashtags into the mainstream, positioning itself as a source or news, and trying to monetize by partnering with American Express.
As much as Twitter is avoiding the IPO spotlight and denying moves to go public, they should look at the stumbling blocks that their predecessors have faced. Ad saturation, investments in fads, blatant unpopularity, failure to innovate – these are just a few problems that could befall Twitter with the wrong company culture or wrong people at the helm. The road to hell might be paved with good intentions, but the highway to stock market success is lined with the bodies of failed tech innovators.