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

Why 2017 will herald a resurgence of values-based marketing

It doesn’t take long for predictions to become predictable: The rise and rise of Facebook; advancements in analytics; the normalisation of chatbots; personalisation, programmatic, automation, authenticity… The prediction that’s missing from these lists is that in 2017 we will witness a resurgence of values-based marketing.

Jacqueline Burns

Founder, Market Expertise

Why customer experience driven growth is set to take off

Our overall brand perceptions are invariably shaped by our experiences. And loyal customer relationships can be severed in moments by a negative service interaction.

Consistency and conversation: How branding and advertising can work better together

Advertising and branding are two of the most visible outputs of marketing, which is why getting them right is so important. However, too often the line between branding and advertising becomes blurred. This means advertising activity can be out of sync with brand, resulting in poor results for both functions.

Dan Ratner

managing director, uberbrand

Someone needs a swift kick up the bum for such an idiotic idea.

random

​Why a degree is no longer enough to get you hired as a skilled marketer

Read more

The frequent flyer programs are the new profit machines for airlines all over the world, as they have morphed to be mass marketing machin...

Steve@iFLYflat

Velocity frequent flyers program strong performer in mixed half-year for Virgin

Read more

Hi Jennifer, thanks for sharing these info regarding the digital marketing trends.I've created a related video to this topic, would you m...

Fabio Carry

Predictions: 17 digital marketing trends for 2017

Read more

Great news. Marketing automation can be very useful for companies at various stages of development. With so many tools out there it's bet...

Ben

How HBF rolled out marketing automation in eight months

Read more

I read a report that the business sector in Australia as a whole have yet to fully harness and see the proactive change that predictive a...

Alex Martin

Report: Predictive analytics, IoT, machine learning battle it out for marketing dollars

Read more

Latest Podcast

More podcasts

Sign in