San Francisco, California, United States
Industry: Technology/Social Media
Region: US 🇺🇸
Year Founded: 2006
IPO Date: 11-07-2013
Market Cap: $47.63 billion (2022)
Number of Employees: Approx. 5,500
Revenue: $3.72 billion (2021)
Net Income: -$1.13 billion (2021)
Twitter, Inc.
Twitter IPO
Twitter publicly filed documents for its IPO with the U.S. Securities and Exchange Commission on September 12, 2013.
The IPO was prepared with an 800-page prospectus. On November 6, 2013, 70 million shares were priced at US$26 and issued by lead underwriter Goldman Sachs.
Trading of the shares began on November 7, 2013, on the New York Stock Exchange. The share closed at US$44.90, giving the company a valuation of around US$31 billion.
Twitter IPO Prospectus
A prospectus is a formal document required by and filed with the Securities and Exchange Commission (SEC) that provides details about an investment offering to the public. You can find Twitter’s Prospectus here.
Company Overview & History
Twitter is an online social media and social networking service owned and operated by American company X Corp., the successor of Twitter, Inc. Users outside the United States are legally served by the Ireland-based Twitter International Unlimited Company, subject to Irish and European Union data protection laws.
On Twitter, users can post texts, images, and videos known as “tweets”. Registered users can tweet, like, “retweet” tweets, and direct message other registered users, while unregistered users only have the ability to view public tweets.
Users interact with Twitter through a browser or mobile frontend software, or programmatically via its application programming interfaces (APIs).
Twitter was created by Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams in March 2006 and launched in July of that year.
By 2012, more than 100 million users tweeted 340 million tweets a day, and the service handled an average of 1.6 billion search queries per day. In 2013, it was one of the ten most-visited websites and has been described as “the SMS of the Internet”.
By the start of 2019, Twitter had more than 330 million monthly active users.
On October 27, 2022, business magnate Elon Musk acquired Twitter for US$44 billion. Since the acquisition, the platform has been criticized for facilitating an increase in content containing hate speech as Musk has emphasized more free speech.
On December 20, 2022, Musk announced he would step down as CEO once a replacement had been found. Linda Yaccarino, the former head of ad sales for NBCUniversal, succeeded Musk as CEO on June 5, 2023.
Financial Performance
| Year | Revenue($B) | Net Income($B) | EBITDA($B) | Operational Cash Flow($B) |
|---|---|---|---|---|
| 2022 | 5.08 | 0.74 | 1.12 | 1.36 |
| 2021 | 4.48 | 0.25 | 0.92 | 1.09 |
| 2020 | 3.72 | -1.14 | 0.77 | 0.91 |
| 2019 | 3.46 | 1.47 | 0.89 | 1.01 |
| 2018 | 3.04 | 1.21 | 0.79 | 0.88 |
| 2017 | 2.44 | -0.11 | 0.55 | 0.55 |
| 2016 | 2.53 | -0.46 | 0.63 | 0.63 |
| 2015 | 2.22 | -0.52 | 0.56 | 0.56 |
| 2014 | 1.40 | -0.58 | 0.30 | 0.30 |
| 2013 | 0.67 | -0.65 | 0.03 | 0.03 |
Business Model
Twitter generates revenue primarily through advertising and data licensing, with the sale of advertising services accounting for around 90% of Twitter’s earnings.
Their advertising services include promoted tweets, promoted accounts, and promoted trends.
Twitter also earns from data licensing, which allows company partners to access, search, and analyze past and real-time public data on Twitter to gain a deeper understanding of their audiences.
Following the acquisition by Elon Musk, two new revenue streams were introduced: APIs and subscription fees for the Twitter Blue feature.
Paid access to Twitter’s APIs means that all interactions between Twitter and other platforms will be available for a certain fee.
The Twitter Blue subscription feature adds a blue checkmark to subscribers’ Twitter accounts, enabling them early access to select features like editing tweets.
The pricing starts at $8 a month for US users or $84 per year, while iOS and Android monthly pricing is $11 or $114.99 a year.
Despite these revenue streams, Twitter is not profitable. In Q2 of 2022, Twitter had a net loss of $270 million, a significant decrease from a net income of $513 million in Q1 of 2022.
Elon Musk has made announcements about increasing the average revenue per user, and the results of these changes to Twitter’s business model are still to be seen.
Market Cap Over the Years
| Year | Market Cap($B) |
|---|---|
| 2022 | 35.9 |
| 2021 | 34.6 |
| 2020 | 38.8 |
| 2019 | 26.2 |
| 2018 | 23.6 |
| 2017 | 16.9 |
| 2016 | 11.8 |
| 2015 | 18.3 |
| 2014 | 23.5 |
| 2013 | 14.2 |
Risk Factors
As with any company, Twitter faces certain risk factors that could impact its future performance. One significant risk is the intense competition in the social media industry.
With numerous platforms vying for users’ attention, Twitter needs to continuously innovate and adapt to changing user preferences to remain relevant.
Additionally, the company’s reliance on advertising revenue makes it susceptible to changes in the advertising landscape, such as shifts in user behavior or regulatory changes.
Twitter also faces the risk of cybersecurity threats, data breaches, and privacy concerns, which could undermine user trust and have negative repercussions on its business.
Finally, regulatory and legal challenges, including issues related to content moderation and data privacy, pose ongoing risks to the company.
Market Opportunity
Twitter operates in the dynamic and ever-growing social media market, which presents both opportunities and challenges.
The platform’s strength lies in its ability to facilitate real-time public conversations and provide a space for users to connect with a wide range of content, news, and influencers.
As social media continues to shape the way people communicate, Twitter has the potential to tap into new markets and demographics, expand its user base, and drive user engagement through product innovation.
Additionally, as digital advertising continues to grow, Twitter can leverage its vast user data and targeting capabilities to attract advertisers and generate revenue.
Moreover, the increasing importance of social media in politics, journalism, and activism presents Twitter with the opportunity to become a vital platform for public discourse and information sharing.
Competitors
- Facebook (including Facebook-owned platforms like Instagram and WhatsApp)
- Snapchat
- TikTok
- Discord
Key/Fun Company Facts
- Twitter was founded in 2006 by Jack Dorsey, Biz Stone, and Evan Williams. The platform’s iconic character limit of 280 characters was initially set at 140 characters when it was launched in 2006 but was doubled in 2017.
- Twitter’s blue bird logo is named Larry, inspired by the basketball legend Larry Bird. The first tweet, sent by Jack Dorsey, was “just setting up my twttr” on March 21, 2006.
- Twitter has played a significant role in shaping social and political movements, including the Arab Spring, Black Lives Matter, and various grassroots campaigns.
- The platform has become synonymous with hashtags (#), which were popularized by Twitter as a way to categorize and search for specific topics.
- Twitter’s user base includes prominent figures from various fields, including celebrities, politicians, journalists, and thought leaders.
- The annual tradition of “Twitter Fiction Festival” showcases creative storytelling through tweets, bringing together authors and readers in a unique format.