About an hour ago the second major social media platform in the past 18 months offered you a chance to buy in. Twitter’s November 7th initial public offering is another testament to the popularity, power and money-making potential of social media. The reviews and opinions are mixed on Twitter’s overall profit plan and growth forecast, but one thing is certain, social media, Twitter, specifically, has emerged to the main stage of not only marketing, but global finance.
In a former life I held my securities license with a major investment bank (technically I still do) and watched closely last spring as Facebook’s long awaited IPO came in with a roar and left with a whimper. Well, most of the whimpering was from those early investors who watched day after day as they lost money. It was interesting watching that first day as Mark Zuckerberg’s value fluctuated by 10s, if not 100s, of millions of dollars with each tick on the clock. The Facebook IPO is really the only precedent that’s been set for investing in the social media age. The mixed reviews and varying opinions on Twitter’s potential as a sound investment are largely based on Facebook’s lackluster performance last May.
Mad Money’s Jim Cramer is concerned about institutional investors pressuring brokers into buying as many of the 70 million shares as possible and then selling them for a gain to retail investors. This is what similarly happened to Facebook in 2012, leading to a steady decline in the stock’s value. There are also other concerns about Twitter’s size and financials. Right now, there are about 218 million users on Twitter, compared to 1.2 billion on Facebook. However, this shows that there is plenty of room for growth. The glaring statistic is that Twitter has never actually made money. It did, however, more than double its sales in the six months ending June 30th,2013, up from $122 million in the first half of 2012 to $254 million, but at the same time its net losses increased to $69 million, up from $48 million in the same period last year.
So, like I said, mixed reviews and varying reasons for those opinions. Essentially you can justify any statistic to support either side of the argument: “To buy or not to buy." However, there is one thing that can’t be ignored. Social media has become a major player on Wall Street. Hundreds of millions, billions of people are leveraging it for news, information and communication. Twitter is adding approximately 135,000 new users every day. Do you know the really beautiful thing about it? As a marketer, it’s free! Not only has social media gotten the attention of CNBC and the SEC, it's also delivering you a thirsty, needy audience with complimentary gift wrapping. Ad agencies in Louisiana must utilize these tools.
Twitter, Facebook, LinkedIn, Google+ are all tremendous avenues for you to share content, grow your brand and generate and convert leads for your business. So whether or not you decide to open your wallet and become a “co-owner” of Twitter, it’s definitely time to invest in social media.