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 newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

Conversations over a cuppa with CMO: Microsoft's Pip Arthur

​In this latest episode of our conversations over a cuppa with CMO, we catch up with the delightful Pip Arthur, Microsoft Australia's chief marketing officer and communications director, to talk about thinking differently, delivering on B2B connection in the crisis, brand purpose and marketing transformation.

More Videos

JP54,D2, D6, JetA1 EN590Dear Buyer/ Buyer mandate,We currently have Available FOB Rotterdam/Houston for JP54,D2, D6,JetA1 with good and w...

Collins Johnson

Oath to fully acquire Yahoo7 from Seven West Media

Read more

Great content and well explained. Everything you need to know about Digital Design, this article has got you covered. You may also check ...

Ryota Miyagi

Why the art of human-centred design has become a vital CX tool

Read more

Interested in virtual events? If you are looking for an amazing virtual booth, this is definitely worth checking https://virtualbooth.ad...

Cecille Pabon

Report: Covid effect sees digital events on the rise long-term

Read more

Thank you so much for sharing such an informative article. It’s really impressive.Click Here & Create Status and share with family

Sanwataram

Predictions: 14 digital marketing predictions for 2021

Read more

Nice!https://www.live-radio-onli...

OmiljeniRadio RadioStanice Uzi

Google+ and Blogger cozy up with new comment system

Read more

Blog Posts

A Brand for social justice

In 2020, brands did something they’d never done before: They spoke up about race.

Dipanjan Chatterjee and Xiaofeng Wang

VP and principal analyst and senior analyst, Forrester

Determining our Humanity

‘Business as unusual’ is a term my organisation has adopted to describe the professional aftermath of COVID-19 and the rest of the tragic events this year. Social distancing, perspex screens at counters and masks in all manner of situations have introduced us to a world we were never familiar with. But, as we keep being reminded, this is the new normal. This is the world we created. Yet we also have the opportunity to create something else.

Katja Forbes

Managing director of Designit, Australia and New Zealand

Should your business go back to the future?

In times of uncertainty, people gravitate towards the familiar. How can businesses capitalise on this to overcome the recessionary conditions brought on by COVID? Craig Flanders explains.

Craig Flanders

CEO, Spinach

Sign in