Mobile Community Twitter's Got A Revenue Conundrum

Article Information

  • Posted By : Xeni L
  • Posted On : Feb 13, 2014
  • Comments : 6
  • Views : 1214
  • Likes : 4
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  • Category : Burning Issues
  • Description : Valuations have ranged from the ridiculous to the sublime in the days following the Tweet Heard Around The (Social Media) World in mid-September when the company announced it was going public in an appropriately brief, 140-character tweet. Now that its S-1 registration statement is out; the predictions are only going to multiply in number getting more difficult to swallow.

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  • Inspired By Will Ashworth
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Overview

  • Lack of Profits

    Google's (Nasdaq:GOOG) revenue was $1.47 billion when it went public in August 2004. Facebook had annual revenue of $3.71 billion when it IPO'd in 2012. Both were considerably larger than Twitter in terms of revenue (2012 revenue $317 million) when offering its shares to the public. Not only that but they made money — something Twitter does not.

     

    Twitter has 218 million monthly active users (MAU) who each generate $1.47 in annual revenue. That's an operating loss of 35 cents per user. When Facebook went public it had 901 million MAUs each generating $4.11 in annual revenue and $1.96 in operating profit.

     

    It now has five times the users Twitter does. Of even greater importance is the fact that Facebook has grown its MAU's on an annualized basis by 11.5% over the past 27 months.

     

    Meanwhile, Twitter's annualized growth rate in terms of MAUs was just 7% in its most recent quarter, much less than the 10%-11% it was averaging previously. I don't know what Twitter's break-even point is in terms of MAUs but it's definitely greater than 218 million.

    Based on first-half results at the end of June, Facebook's annualized revenue and non-GAAP operating profit per MAU is $5.69 and $2.37, respectively. Since its IPO in May 2012 it's been able to increase monthly active users by 28% to 1.15 billion.