Twitter Valued at $10Bn as it Aims to Raise $1Bn in IPO

Twitter is to reach $1bn at its IPO later this year, which would brought the network to $10bn despite the fact it is still loss-making.

Twitter hopes to attract investors with upcoming revenue growth despite three-year lack of profit, reports say. Photo: West McGowan/Flickr

The world-popular microblogging service, which is regularly used by politicians as well, provide potential investors their first glance at its financials, following their file-in of its initial public offering documents.

Revenue increased in almost three times to $316.9 million last year, thanks to advertising. However, In the first half of the current year, the social network posted revenue of $253.6 million but had a loss of $69.3 million.

Twitter managed average revenue per one user in the second quarter of 2013 of 64 cents compared to Facebook’s roughly $1.60, according to Reuters‘ calculations.

Losses are “a non-issue,” said Brian Wieser, analyst at Pivotal Research Group.

“It would have been a surprise if they had a profit. Here’s the number that really matters. It’s the revenue per customer. The question is how much is the typical commitment they’re getting from advertisers at this time.”

“Facebook’s bumpy start has made many investors wary of technology stocks. Twitter’s flotation is seen as the first real test of shareholders’ current appetite for the sector,” The Telegraph writes.

The social networking site had 218m users at the beginning of summer, but its S-1 documents tell potential shareholders that they could fall away if Twitter is eclipsed by more popular social network.

Growth would slow if “users engage with other products, services or activities as an alternative to ours”, it said, adding that “influential users, such as world leaders, government officials, celebrities…or certain age demographics [could] conclude that an alternative product or service is more relevant”.

The service, which offers its users to post short pieces of news, has also warned investors it would face troubles if adverts carried posted on the site became annoying.

Twitter also concerned that its service would lose its popularity if users worried that their privacy was being compromised or in case of too many users cluttering the co-called “Twittersphere” with pointless commentary.

Growth would slow if “there is a decrease in the perceived quality of the content generated by our users”, the company said.

The company, which was launched eight years ago, has grown to approximately 2,000 employees and opened about 15 offices around the world.

Along the way, Twitter has offered advertisers new ways to reach audiences, from a “promoted tweets” model which was later copied by Facebook and other Internet platforms, to its “second screen” approach to encouraging real-time debate around television programs.

Every month the service is used by 218.3 million active users, on average, in the three months ended June 30.

In a short message from “@twitter,” the company outlined its mission as giving “everyone the power to create and share ideas and information instantly without barriers. Our business and revenue will always follow that mission in ways that improve-and do not detract from-a free and global conversation.”

Co-founder and former CEO Evan Williams is Twitter’s largest shareholder as he owns 12 percent of the shares, while to co-founder and chairman Jack Dorsey belong only 4.9 percent. Biz Williams, another co-founder, has no shares while current Chief Executive Costolo owns 1.6 percent.

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