One of the world's best-known social media platforms, Twitter, will announce its initial public offering (IPO) today - an occasion analysts say could signal sweeping changes in the world's tech business landscape.
Twitter is set to trade on the New York Stock Exchange, under the ticker TWTR. Reuters reports Twitter priced 70 million shares at $26 - above the targeted range of $23 to $25, which had been raised once before.
"The IPO values Twitter at $14.1 billion, with the potential to reach $14.4 billion if underwriters exercise an overallotment option, as they are widely expected to."
According to Thomson Reuters data, if the full overallotment is exercised, Twitter could raise $2.1 billion, making it the second-largest Internet offering in the US behind Facebook's $16 billion IPO and ahead of Google's 2004 IPO.
Winds of change
The micro-blogging social network's IPO follows that of the world's largest social network, Facebook, last year, and professional network LinkedIn's listing in 2011. And, while the latest listing represents the maturing of the social media landscape, social media has already garnered healthy respect from major companies, says World Wide Worx MD Arthur Goldstuck.
He says the realm of social media has gone beyond the point of being just a craze or trend that may or may not be around in a few years' time. "Our SA Social Media Landscape 2014 report shows that nine out of 10 of SA's biggest brands are using Facebook, and seven out of 10 are using Twitter."
Where Twitter's listing will change things, Goldstuck says, is in that it will bring greater transparency to the social media landscape - due to the quarterly reporting burden of companies listed in the US.
Africa Analysis analyst Dobek Pater says the new social media company listing is evidence of a shifting landscape. "The tech/ICT landscape is certainly changing in the sense that we are moving further towards a separation of services, where the underlying infrastructure (telecoms networks, IT equipment, end-user devices, etc) are increasingly disassociated from the services we consume."
Pater says service provider companies - especially over-the-top type companies - are becoming very powerful and it is these that will be brands of the future, not the infrastructure technology companies themselves.
Fred Roed, CEO and creative director of digital marketing company World Wide Creative, says Twitter's IPO - the third huge listing in the past three-odd years - means social media is growing up. "It's time to pay the piper in that social networks will be accountable to investors for a business plan other than growing the user base."
Twitter's stock exchange move, he says, will definitely cause companies to see social media in a more tangible, business-oriented light. "Investors are asking more probing questions around the business plan. It's no longer 'how are you getting your first 10 million users?' - it's more like 'where's the problem this business is solving and how much are people prepared to pay for it?'."
Pater thinks the world is still at a stage where the use of social media is a developing trend, for the most part. That said, he notes the larger social media companies have started to move into a stage of development where the focus is increasingly on their usefulness to the business world and the interaction between the business and the consumer markets, beyond just advertising - and practical usefulness to the users in their everyday life, beyond staying in touch with friends or social groups.
"The investors are realising this potential and are prepared to increasingly invest in social media companies. It will probably be another 10 years before we arrive at a point where social media companies are considered blue chip companies in the same light as large technology or pharmaceutical companies."
Roed says the micro-blogging network's IPO ultimately gives it a means to compete aggressively.
Great expectations?
In the build-up to Twitter's listing, Facebook's May 2012 IPO - which saw stock rise and fall and steadily rise again - has widely been referenced.
Social media monitoring agency We Are Social says this is inevitable as just 18 months separates Facebook's historic move and Twitter's - "the most anticipated offering in 2013".
In the wake of last year's social media IPO - and despite fundamental differences between Twitter and Facebook, and the fact that the latter listed on the Nasdaq - many industry observers foresee Twitter's entry on to the stock market will be shaky.
According to Reuters, some analysts have expressed concerns that Twitter's valuation is dependent on sustained user growth and a maturing advertising business - two factors that may never be realised.
"Although the company has close to a quarter-billion users, it lacks the ubiquity of Facebook or the 'stickiness' factor that keeps people checking the number one social network on a daily basis. A Reuters-Ipsos poll last month showed that 36% of people who signed up for a Twitter account say they do not use it."
On the home front, local analysts appear optimistic. Goldstuck suspects there will be great enthusiasm at the start, but this will drop back as analysts warn that Twitter is not generating enough revenue or profits. "Then it will bounce back as investors realise that its growth potential makes current numbers irrelevant."
Roed says he expects "some seriously happy first round investors".
Pater draws the Facebook parallel, saying he suspects it may follow the same pattern - "somewhat disappointing within a short period of time, post the IPO". He notes, however, that Twitter and Facebook are two very different offerings. "Facebook offers more in terms of more comprehensive interaction with other subscribers. Twitter is more versatile and readily usable. It serves a different purpose."
At the end of the day, he says, the worst that can happen is that Twitter goes bust in a couple of years and leaves a lot of upset investors. "But then it's the investors' fault for taking the risk.
"The problem lies in the fact that tomorrow someone could come up with a new best idea since sliced bread, which may prove a better advertising platform and will displace Twitter."
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