Tracking Twitter’s IPO, And Its Upside

twitAfter going public, Twitter saw its stock price nearly double in early trading to a $45.10 high during the early morning hours of day one on the New York Stock Exchange. Twitter sold 70 million shares to raise $1.82 billion with a market cap of $18 billion through the IPO. As trading began, that valuation grew to $25 billion.

Then came the downgrades. An hour or so into trading, Internet equity research firm Pivotal Research Group issued a (much-lower) $30 price target. Senior analyst Brian Wieser told AdExchanger, “This is going to be a very volatile stock.”

“Twitter is a great company,” he reiterated. “They’ve made a lot of great choices. They’re on a wonderful trajectory. They’ll be a very successful business. But the market is ascribing an undue amount of value to that. …  I think it’s important for any investor to have a true north of what the potential of the business is at any point in time because the market is going to be volatile around a wide range of still-evolving expectations of what is still a very nascent company.”

Twitter is the last of the mega-social media platforms to go public. So no surprise today has been one of the most anticipated trading days in technology since Facebook’s rocky entry on NASDAQ more than a year ago.

On the floor at the New York Stock Exchange, CEO Dick Costolo told Bloomberg TV’s Emily Chang that Twitter is “an indispensable companion to life in the moment.” He went on to say, “Twitter is the second screen for the live experience. Twitter and TV work. We’re investing to make sure we’ve got international teams driving unique regional content into the platform.”

Over 70% of Twitter users are outside of the US “and we will continue to invest in that,” Costolo continued. According to Twitter’s SEC filing, just 25% of its total revenue last quarter came from advertisers with billing locations outside of the US – suggesting a large potential upside.

“We are seeing tremendous interest from brands to see how they can leverage second screen campaigns,” commented Maren Lau, a partner and SVP at IMS, a media and marketing agency that leads Twitter’s digital ad efforts in Latin America as its exclusive sales partner. “This integration between television and mobile is critical. Look at what happened with the Super Bowl last year on Twitter in terms of engagement. Next year is going to be a banner year for advertisers looking to reach both Latin American consumers and consumers who will be in Brazil [for the World Cup] at that time.”

In addition to eyeing its global growth proposition, Twitter continues to pave new paths for marketers. This summer, it enabled retargeting for email marketers who matched CRM data with cookie IDs for account holders. Then, Twitter rolled out Lead-Generation cards with direct links to CRM and the analytic chops to measure spend vs. leads derived.

Twitter’s moves to monetize have seemingly centered around the cross-platform marketer. Its acquisition of social TV startup Trendrr followed the $90-million purchase of Bluefin Labs last February.  The company recently entered a partnership with NBC Universal and Comcast, enabling cross-platform actions (setting a DVR to record, for instance) through “See It.”

Twitter also inked a similar deal with CBS and brewed more ways to ramp up broadcast content with Amplify, an audience extension program designed for TV networks to surface short-form video content in the Twitter stream with tagalong ad placements for broadcast advertisers.

“Any way you look at it, Twitter’s IPO is another example of how fast this market is changing and the massive opportunity to be a game-changing company,” commented James Borow, CEO of real-time marketing platform SHIFT, an ads API partner. “Twitter is now poised to solidify its position as the de facto medium for public communication. The market has realized the opportunity Twitter has in front of it, and the long term trading potential is tied to its ability to continue building out the infrastructure for real-time public communication.”

As Twitter pushes to prove out its value to investors, its acquisition of mobile ad exchange MoPub buy may be among its greatest challenges and opportunities. As Wieser noted in a research note, “the most direct business opportunity for MoPub relates to taking share in the market for in-app mobile advertising, especially including real-time-bidded (RTB) inventory.” Independent exchanges like Nexage and Velti could be eyed as formidable competitors.

“Our view remains that Twitter’s choice to buy MoPub likely relates to broader strategic goals designed to help Twitter extend the reach of its advertisers’ campaigns across the broader mobile web,” Wieser wrote.


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