With IPO cash influx, Twitter could be bigger threat to Facebook

Twitter expected to raise initial share price again, just ahead of Thursday IPO

If Twitter's IPO succeeds and showers the social network with a new stockpile of cash, the site could become an even bigger threat to social media giants Facebook and Google+.

Twitter is set to close its books late this afternoon and launch its initial public offering on the New York Stock Exchange on Thursday morning.

As the company gears up for its debut as a publicly traded company, Twitter is expected to raise its initial stock price as much as $25 to $28 per share, according to a report from the Wall Street Journal. The increase would be the second boost to the stock price this week.

Just days ago, company executives bumped the company's share price range from the original $17 to $20 per share to $23 to $25 per share.

Most analysts say this second price jump is a bad move.

"This strikes me as overly aggressive," said Dan Olds, an analyst with The Gabriel Consulting Group. "While I think it's a smart move for companies going public to get as much capital as they can raise, Twitter is still a company that has yet to make a profit. Sure, Twitter has made tweeting a household word, and their app serves hundreds of millions of users, but the company still doesn't have a solid plan for monetizing this massive user base, while, at the same time, not alienating users with intrusive advertising."

Zeus Kerravala, an analyst with ZK Research, called Twitter's price increase "risky."

"There's a lot of hype around this IPO but, as we saw with Facebook, the upped price can cause investors to stay away," he added. "They're buying into their own hype and the financial backers are getting greedy."

Kerravala said he'd rather see Twitter start out with a lower share price and then watch it shoot up, creating excitement in the market.

If Twitter's IPO goes well, bringing in billions of dollars for the social network, executives likely have a wish list all ready to go.

Brian Blau, an analyst with research firm Gartner, said Twitter executives should be focused on bolstering operations, expanding internationally, and bringing in new talent.

Brad Shimmin, an analyst with Current Analysis, said Twitter should use some of its new wealth to invest in its own infrastructure.

"Things have gotten better over the past year, but because of the heavily episodic nature of Twitter use, which ebbs and flows along with cultural interest in volatile trends, Twitter will need to keep the Fail Whale at bay if it is to build a consistent and successful advertising program," Shimmin said. "Honestly, I think after the requisite Ferraris have been purchased, the company will invest in its future. There are many opportunities out there for a company like Twitter, which serves a highly mobile and engaged customer base. Think location- or event-based advertising."

A money-infused Twitter could be an even bigger threat to other social networks, like Facebook, Instagram and Google+.

Social media marketing on the rise as RPV value leaps
Facebook ad spend up as marketers favour platform over Twitter

Twitter, has had a tight grip on the immediacy factor in social networking.

When there's a major event, such as the Red Sox win the World Series or a hurricane strikes, users turn to Twitter before other social networks to celebrate, share information and vent their frustrations.

Facebook, aware that it has a ways to go to boost immediacy among its users, adopted Twitter-like hashtags and Trending Topics.

Olds said becoming a bigger challenger to Facebook and other social networks is precisely what Twitter needs to do.

"Twitter is going to have to become a bigger competitor to the other social networking companies, since they're competing for the same advertising dollars," he added.

This article, With IPO cash influx, Twitter bigger threat to Facebook, was originally published at Computerworld.com.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is sgaudin@computerworld.com.

See more by Sharon Gaudin on Computerworld.com.

Read more about social media in Computerworld's Social Media Topic Center.

Join the CMO newsletter!

Error: Please check your email address.
Show Comments

Supporting Association

Blog Posts

Behaviour change, by design

​We’re living in an age of unprecedented change. We experience with Oculus Rift, invest with Acorns, consume video through Hyper, tune into Pandora and navigate with Waze.

Glen Jeffreys

Head of UX, Deepend Group

Chat bots: How to use them commercially right now

I’m sure that many of you out there have heard a lot about chat bots (aka messaging bots) recently, and the fact that they are here to stay is pretty evident by now.

Deniz Nalbantoglu

Managing director, Webling-Interactive

Top tips to uncovering consumer insights for business innovation

An in-depth understanding of consumers sits at the heart of what we all need to do, but we know it’s not always easy to uncover insights that will unlock a true innovation opportunity.

Matt Whale

Managing director, How To Impact

Thanks, Nadia. It was so interesting blog for me because it helps me able to understand well on the basics of business and marketing conc...

MichaelBGreen

3 ways marketers can raise their executive influence

Read more

Having been to the AO on Wednesday for the first time in a number of years I was very impressed with the new branding. The event has evol...

Naomi

Tennis Australia unwraps new brand identity for Australian Open

Read more

This was amazing and so inspiring. Thanks for sharing.

Vijay Kumar

Design thinking: Leading with experience

Read more

Great read, thanks for posting. MR should be seen as the holy grail for marketers and brands, as it offers an unprecedented capability to...

Barney

Interview: The business case for mixed reality in marketing

Read more

what a load of shit, and what a major stuff up... the new brand device is sterile, boring and just plain bad. Would be better suited to a...

James Yoi

Tennis Australia unwraps new brand identity for Australian Open

Read more

Latest Podcast

More podcasts

Sign in