Happy Birthday Dear Twitter, Happy Birthday to you!
How old are you now?
“My name is Twitter. I am 1 years old and I am worth 10% less than when I was born, 1 year ago today”
Social Media is a great communication, entertainment and productivity tool. We use Facebook, for example, quite a bit with our Clients’ for all of those functions.
Maybe this is one reason why we do not use Twitter that often!?. But hey, what do we know, the average age of our Financial Advisors is close to 50 years old.
So I guess, like another great communication tool, the telephone, let’s make sure the tools we use are solid ground companies that are going to be around for a few years.
Twitter Inc. , is celebrating its one-year anniversary as a public company today . Its performance by many measures , less than stellar.
After opening at $45.10 on its first trading day, Twitter’s share price , as of Nov 6th, today it is lower at $41.12, or at 10% less.
The San Francisco-based company also continues to bleed money, with losses widening faster than sales gains.
Twitter, during the run-up to last November’s IPO, touted its global reach and potential during its pitch to investors, asking them to focus on monthly user numbers instead of profits.
Twitter’s rookie-year performance as a public company remains far above that of other technology firms such as social games maker Zynga Inc. or daily-deals site Groupon Inc., both of which were trading below their IPO prices 12 months after their debuts. Twitter is also doubling its revenue on a year-over-year basis, and is sitting on plenty of cash after going public and following a convertible debt offering in September.
The first year of a Web company’s life on the stock market also doesn’t set the standard for future performance. A year after Facebook Inc.’s IPO, the Menlo Park, California-based company’s stock was down about 31 percent from its debut price. Since then, the social network’s value has soared on the success of its mobile-advertising business.
Yet Twitter is undergoing an adjustment with investors after a stock rise in the first few months after its IPO, which has now reversed. This year, the stock has slipped 35 percent, compared with a 9.3 percent gain in the Standard & Poor’s 500 Index.
Twitter has almost completely shuffled his top lieutenants since the IPO, ousting the chief operating officer, replacing his chief financial officer, head of engineering and head of product.
Twitter’s loss more than doubled to $175 million in the third quarter from a year earlier. While sales climbed 114 percent to $361 million in the same period, they were dwarfed by Twitter’s mounting expenses, as the company hires new engineers and expands internationally. Costs and expenses more than doubled to $522.7 million. Users rose 23 percent to 284 million, down from 24 percent growth the prior quarter.
Many people believe this will continue to be volatile until there’s a tangible, profitable business model.
Twitter’s performance illustrates how venture capital-backed IPOs tend to experience a surge in shares shortly after the companies go public, followed by a decline after the hype fades.
Venture capital-backed IPOs produce annualized returns of 36 percent above the S&P 500 Index in their first three months as a public companies, with returns dropping to 3 percent below the benchmark after one year.
So , while I’m told by many of the “younger than 30” crowd, to continue to use Twitter, I think , our Advisors will stay with the old methods of phone calling and behind the scenes solid companies that provide great communication tools.
But on second thought, I do love my Blackberry and Texting! Hmmm!
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