Twitter is nearly ten years old

The social media giant is approaching its tenth birthday, and despite a surge in popularity initially, its share price has been performing poorly since floating.

The first ever tweet – Jack Dorsey’s ‘just setting up my twttr’ – was sent ten years ago this month. As the anniversary nears, we’re taking a look at how the business has grown since its IPO in November 2013, and what the future looks like for the social media giant.

The IPO
By the time of its IPO, Twitter had over 204 million users. The explosion in the number of monthly active users (MAU) in such a short time period drew parallels with the rise of another social media success story: Facebook.

An IT glitch at the NASDAQ caused a delay in the trading of Facebook’s shares on the day it listed, and for that reason Twitter decided to list on the traditional NYSE rather than the tech-focused exchange.

Twitter’s flotation was a roaring success, the IPO price which was available to institutions was $26, and the share price jumped over 73% from there on the first day of trading. The company’s top brass like Evan William, Jack Dorsey and Dick Costolo became paper billionaires on the day of the listing.

Recent trouble
MAU is a crucial measure of success for social media companies. Twitter’s enormous jump in users from its creation to flotation is certainly impressive, but since listing, the growth rate has been less impressive. Between the first-quarter of 2013 and the fourth-quarter of 2015, the firm added just over 100 million MAU’s and in percentage terms that is nearly 50%.

The last quarter of 2015 showed a small decline in MAUs and that was not received well by investors, especially when you consider that Facebook has in excess of 1.5 billion MAUs.

Being able to monetise your client base is essential for social media companies, and the majority of Twitter’s revenue comes from advertising but the growth of MAUs needs to be strong too.

Twitter revenue chart
Facebook revenue chart

Since listing, Twitter’s quarterly revenue has increased by 184% while Facebook’s has jumped 314%. Weaker MAU and revenue growth is why Twitter is trailing Facebook in terms of share price performance. Since listing Twitter’s stock has dropped 55% while Facebook has risen 161%. 

Company Buy ratings Hold ratings Sell ratings Average target price Current share price
Twitter 15 24 3 $20.74 $18.54
Facebook 48 4 1 $134.77 $109.82

 

Equity analysts are clearly less bullish on Twitter than they are on Facebook. The current percentage of buy, hold and sell ratings for Twitter is 35.7%, 57.2% and 7.1% respectively and that compares with breakdown in March 2015 of 44.7%, 52.7% and 2.6%. Investment banks have lowered their target for Twitter to $20.74 from $53.30 in March 2015.

Will Twitter overcome its troubles and hit another major milestone? 

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