Twitter, in “confidentially” filing an S-1 prospectus with the Securities and Exchange Commission earlier this month, hoped to avoid screwing up the I.P.O. process the way Facebook did in 2012. The company’s public S-1 filing on Thursday is the clearest window yet into a more fundamental difference between Twitter and Facebook: Twitter will be far less proven, as a business success, at the time of its I.P.O.
Consider a couple of points of comparison. Twitter had revenue of $317 million in 2012, the calendar year that preceded its filing; Facebook had $3.7 billion in 2011, the year before its own filing. Twitter saw a net loss of $79.4 million; Facebook enjoyed earnings of $1 billion. As of December of the year before the filing, Twitter had a hundred and eighty-five million monthly active users; Facebook had eight hundred and forty-five million. And here’s an especially telling metric. Countries outside of the U.S.—where businesses, Web-based or not, are increasingly looking for growth—represented only seventeen per cent of Twitter’s revenue in the year before its I.P.O. filing; for Facebook, international countries provided forty-four per cent of revenue in the comparable year.
“For a company that’s supposed to be the next big thing in online advertising, Twitter is losing a lot of money,” Robert Hof pointed out on Forbes.com. “Despite its ubiquity, Twitter’s strength as a business is unclear,” Telis Demos and Yoree Koh wrote in the Wall Street Journal.
One would be forgiven for starting to feel a little nervous about Twitter’s prospects at this point. But the difference between Twitter and Facebook has a lot to do with timing. The Internet has changed so much in the past decade that the years sometimes seem to blur together, but Twitter was’t created until two years after Mark Zuckerberg started Facebook in his dorm room; it’s not all that surprising that it’s not as far along—in revenue, profit, and success outside the U.S.—as Facebook was at the time of its I.P.O. And of course Twitter’s valuation will be considerably lower: perhaps twelve or fifteen billion dollars instead of a hundred billion.
Maybe this is just as it should be. We love reading tweets because of their brevity and their speed—and maybe, given the way that truth functions on Twitter, because everything you read always comes with a little bit of risk.
Above: Jack Dorsey. Photograph Bill Pugliano/Getty.
