Is Twitter the anti-Facebook IPO? Sure – its losing money, its growth is slowing but at least its bankers are the same

Here’s what we have learnt about Twitter from it’s IPO filing. The company has 218 million active monthly users up from 151 million a year ago. It has about 100 million daily active users.

We also know that it generated revenues of $US254 million in the first six months of this year, which is slightly more than double the figure of a year ago. During calendar 2012 its revenues were $US316 million which coincidently is about how much profit Facebook generated in just one quarter prior to its float. More on that in a moment.

You will find more statistics at Statista

But if you’re drinking Cool Aid from a glass half full then the good news is that it is now growing its revenues twice as fast as it is growing its audience.

Unfortunately its also growing its costs almost twice as fast as its growing its audience. The bad news therefore is that it lost $69 million in the first six months this year and that loss is 40 per cent worse than the same period last year.

The reason is simple mathematics. That strong revenue growth is built on a cost platform which itself is growing at 86 per cent, although most of that is R&D which is fair enough for a company of this nature at this stage of its maturity. And R&D is also the fastest growing cost.

Another little red flag that’s worth considering – the cost of sales is growing significantly faster than the revenues of the business which is not the kind of inefficency a company wants to carry on with for too long.

We’re not Facebook

Right now Twitter’s IPO spinners are out hard in the market positioning the Twitter listing as the anti-Facebook IPO in recognition of the fact that investors were treated like mugs by Facebook and its bankers.

But the three key banks behind it all are exactly the same: Goldman Sachs, Morgan Stanley and JP Morgan Chase. The key difference is that this time Goldman Sachs is taking the lead.

If you feel that should give you room for comfort remember that it was Goldman Sach’s people who famously referred to their customers at “muppets” and whom Rolling Stone once famously described as “The great vampire squid, wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

The danger of course in spinning yourself as “Not Facebook” is that it invites the obvious comparisons.

Facebook for instance was already returning a tidy profit by the time it listed; $302M in Q4 2011, where as Twitter has never turned a buck. Facebook also had four times as many monthly and daily active users at the time of its IPO. And Twitter’s user growth is slowing.

You will find more statistics at Statista

Reuters found a interesting gem hidden amongst the entrails. “Twitter managed average revenue per user in the second quarter of 2013 of 64 cents compared to Facebook’s roughly $1.60,” said the news service.
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