Twitter, the 140-character microblogging service, is unprofitable. In fact, it's lost $70 million so far this year. But it's worth billions of dollars. And it's about to make some people very rich. (Not you.)
The next stock market hysteria is here: Twitter's S-1 filing with the SEC, detailing brand new information about the hot ticket company, is now public. It's a money-loser, but will be the biggest financial craze since Facebook—let's dig in.
Here's what we now know about Twitter and its impending initial public offering:
- It will trade under the symbol TWTR
- The IPO will raise $1 billion
- Jack Dorsey owns 4.9 percent of the company, Ev Williams 12 percent, and CEO Dick Costolo 1.6 percent. They are all going to become very, very rich, in varying degrees. Poor Dick! Just kidding, that's still a lot. Outside investors will also score tens or hundreds of millions of dollars for themselves.
- Twitter is not profitable. It lost almost $70 million in the first six months of 2013, and has never been profitable—though revenues were $28 million in 2010, and $316 million last year. That's a big jump, but doesn't negate the fact that this business doesn't turn a profit.
- Twitter currently has 215 million monthly active users—less than expected. Facebook has over a billion.
- CEO Dick Costolo draws an annual salary of $200,000, though it was just reduced to $14,000 this summer—he also made about $10 million in stock, so good deal overall.
- Twitter is very proud of the way Wheat Thins and other cool brands seed the internet with viral gruel
- Twitter claims only 5% of its accounts are fake, which seems very, very low.
- Twitter co-founder Biz Stone isn't mentioned once in the S-1. Huh.
- Twitter says investors should be interested because of the data you provide for free is valuable:
Access to Actionable Data. Our platform enables data partners to analyze and act upon data that is current, unfiltered and public. Our data is the foundation for applications and tools that can draw relationships between social interactions and business results, and even derive signals that influence economic, political and public health and safety decisions.
Among the moments Twitter considers most valuable in its history as a communications platform: The death of Osama Bin laden, the discovery of ice on Mars, Nobukazu Kuriki's Everest ascent, the birth of the royal baby, and that stupid Oreo tweet during the Super Bowl halftime.
- Twitter has around $375 million in cash reserves right now.
- Roughly 85% of Twitter's revenue comes from selling ads, and the rest from licensing user data (from people like you!) to 3rd parties.
- This is what Twitter thinks about itself: "Twitter is a primary source of information and complements traditional media as a second screen, enhancing the overall experience of an event by allowing users to share the experience with other users in real time. We believe this makes Twitter the social soundtrack to life in the moment."
- Twitter admits it's almost completely reliant on the online advertising market: "We generate the substantial majority of our revenue from advertising. The loss of advertising revenue could harm our business."
Most regular people won't look at any of this—Twitter stock will move with zeal because it's TWITTER, and Twitter is an exciting thing to talk about! It's new, young, expanding, and even though it's bleeding millions of dollars and reliant almost completely on fickle ads, it will draw interest on its name alone. People will buy Twitter because it's Twitter. And it has to make money eventually, right? Right?