Last Thursday, Twitter announced that they had filed an S-1 with the SEC for a planned IPO. The company made the announcement known in a tweet (no surprise there), though few details were made available beyond the initial announcement.
We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.
— Twitter (@twitter) September 12, 2013
Given the lack of details, it is reasonable to assume that a Twitter IPO still might be a ways off, but it is worth speculating now if the company will be a good investment.
Twitter has undoubtedly made great strides in boosting revenues, thanks mostly to its ‘sponsored tweets’ section. And with a massive user base of over 200 million, many believe that the sky is the limit for this company.
Still, there is a big question mark of if Twitter is profitable now, or if it ever will be in the future. Furthermore, the hype over Twitter is immense, and the company will have a difficult time in living up to previous social media firms that have gone public (see Social Media ETF on Fire After String of Earnings Beats).
After all, LinkedIn (LNKD) is up over 170% since its IPO, while Facebook (FB) is now at an all-time high and a market-darling after its last upbeat earnings report. Meanwhile, the Global X Social Media ETF (SOCL) which can be thought of as a broad barometer of global returns in social media-related stocks, is up over 43% in the past one year, further underscoring the positive trends in the space.
This is clearly a great environment in order to bring a fresh social media stock to market, but can this incredible trend last? And while LinkedIn and more recently, Facebook, have unlocked the revenue secret for social media, will Twitter be able to do the same?
What do you think; will Twitter be a buy when it has its IPO or is this a social stock to stay away from?
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FACEBOOK INC-A (FB): Free Stock Analysis Report