U.S. Markets closed

Twitter’s Biggest Challenge Goes Beyond Widened Losses


Twitter updated its S-1 yesterday as the company gears up for its coming IPO. As part of the filing, Twitter confirmed that it will list on the New York Stock Exchange (NYX) instead of the Nasdaq (NDAQ), using the expected TWTR ticker. According to CNBC, Twitter's roadshow will start on October 25. Shares are expected to be priced November 14th and the stock will start trading the following morning.

Financial details were also updated to include results through the quarter ending September 30, making the S-1 something akin to a pre-season earnings report. Among the highlights:

  • Twitter had 48 billion tweet impressions online in Q3, up from 30 billion the prior period
  • Mobile users expanded to 76% of the user base, up from 75%
  • Ad revenues from mobile as a percentage of all ad dollars grew to 70% from 65%
  • Revenue growth in the trailing nine months slowed to 106% compared to 107% growth during the three quarters that ended June 30
  • Twitter lost $64.2 million on revenues of $168 million for the quarter compared to a loss of $42.2 million on $139.2 million in Q2

Growing revenues 20.6% while increasing losses at more than twice that rate is something Twitter is obviously going to have to work on after it goes public.

Related: Twitter IPO Guide: What to Know Before You Buy the Hype

To that point there is anecdotal evidence that Twitter's advertising software systems could use some fine tuning too. And this could be a much larger challenge. The entire point of advertising via social network is to create compelling advertising content based on the people with whom users choose to interact.

By way of example I've used my twitter handle @JeffMacke. Lately I've been getting frequent reminders that the Surface 2 from Microsoft (MSFT) is available for pre-order. While not intrusive enough to damage my user experience, Surface 2 pre-order information invariably serves to remind me that Apple (AAPL) will update it's iPad on October 22nd. Presumably mine is not the reaction Microsoft had been hoping for when it signed up with Twitter.

If Twitter's software poured through my Tweets, culled the list of the 300 or so people I follow, and came to the conclusion the odds of me buying a Surface 2 would be improved if Microsoft gave me a chance to go to Orlando to see Pitbull, they need better coders.

Near as I can imagine what Pitbull and I share are great looks, bald pates and no desire whatsoever to buy a Surface 2. Hopefully some of Twitter's IPO windfall has been earmarked for R&D.

More from Breakout:

Twitter Won't Be Like Facebook Fiasco, Says Jackson

Debt Deadline Approaches: Here’s What Would Happen If U.S. Defaults

Boo! Washington Trickery Haunts Halloween Sales