How Facebook Inc (FB) And Twitter Inc (TWTR) Fared After Their Respective IPOs?


Facebook Inc (NASDAQ:FB)’s first trading day as a public company in May 2012 was hit by a technical glitch that sent shares tumbling afterwards. Some advertisers, such as General Motors Company (NYSE:GM) even pulled out from Facebook just a week into the IPO. General Motors denied Facebook $10 million in ad dollars following the move. However, things were much better for Twitter Inc (NYSE:TWTR)’s IPO, with shares jumping 73% on the first trading day. Twitter went public in November 2013.

In the longer-term things have gone differently with Facebook rising over 100%, while Twitter is up just below 17%, since each respective company’s IPO.

Facebook outlives IPO troubles

While Facebook Inc (NASDAQ:FB)’s IPO was far from smooth, the company has been able to surpass expectations. Its mobile population especially has been growing rapidly, which is good for its future revenue growth. People are moving to consume digital content on mobile platforms and advertisers are interested in the mobile numbers.

Facebook is in a good position to continue generating higher revenue because of its massive pool of mobile users. Two-thirds of the $12.5 billion revenue that Facebook generated in 2014 came from mobile. The company generated about $3 billion in profits last year while Twitter suffered a loss in the same period.

The progress of Facebook Inc (NASDAQ:FB) since its IPO has shown that the problems of a troubled IPO can be outlived through aggressive turnaround.

Post-IPO troubles for Twitter

Twitter Inc (NYSE:TWTR) had a smooth IPO, but things started moving in the wrong direction before long. Investors have been spooked by the tepid growth of users on Twitter’s platform, raising concerns about whether it will be able to catch up with Facebook or even overtake it. Twitter finished 2014 with 288 million active users, having added only 4 million new users in the last quarter of the year. Wall Street expected bigger user growth for the quarter.

It has also gone largely unexplained why close to 500 million visitors come to Twitter every month but fail to sign up for accounts. The company has now come up with a strategy to generate revenue from this mass of logged-out users, but it can only monetize the unregistered users at half the rate of the registered ones. Investors are interested in the number of registered users because of the high average revenue per user.

Facebook Inc (NASDAQ:FB) has done fairly well since its IPO with shares rising amid strong revenue and profit numbers. The same cannot be said of Twitter which is struggling to remain relevant amid slowing user growth.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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