On October 3rd Twitter announced its IPO. The share price is expected to be $20.62, which values the company at $9.7billion.

On one hand Twitter appears to be the poster child for an IPO-ready company: increasing revenue growth from “$28 million in 2010 to $317 million last year;”increasing active users from 151 million to 218 million in the same time period; and receiving more than 65% of its advertising revenue from mobile devices.

On the other hand there is an overwhelming amount of data that suggests that Twitter may be too quick to follow in the steps of big brother Facebook, and that the IPO will not be as successful as its backers and supporters hope.

In its seven years of operations the company has increased profits, but it has also been steadily increasing losses.  Conversely Facebook reported lower losses leading up to its IPO.

Furthermore, there is confusion and some doubt among potential advertisers who point out that many people “just don’t get Twitter.”  If Twitter is eventually going to go the way of the dodo, it is not something a company wants to spend millions of precious advertising dollars on.

As well, revenue and user growth at Twitter has stalled at 7% annually.  Is a time of static growth the time to launch an IPO? Even Twitter admits that to expand more overseas in terms of users and advertisers would “require a significant investment of time and resources.”  The question then becomes whether it is good timing to invest in a company immediately prior to its biggest capital outlays, especially a company that has experienced accelerating losses since its inception.

Facebook’s IPO was a disappointment and a bit of a $104 billion gong show that is just now getting on its feet after a year and a half of share price mayhem.  Twitter is treading on weaker ground than Facebook was in 2012.  Ideally Twitter should solve its operational and financial issues before going to the public markets to prove it is a long-term player in the social networking space.

But, the Fed is printing money, the markets are hot, we are in high tech’s period of seasonal strength, and the naïve investing public is infatuated with tweeting.  In other words, the time is ripe for yet another public fleecing where, in a year or so, Joe and Mary Investor will wonder why the Twitter stock their advisor sold them is floundering.

Maybe their broker can be reached in his Maserati with a tweet.

Citations:

The Economist. The Economist Newspaper, 4 Oct. 2013. Web. 06 Oct. 2013.Tate, Ryan. “Twitter Opens the Books, But Facebook’s IPO Looked So Much Better.” Wired.com. Conde Nast Digital, 02 Oct. 0013. Web. 06 Oct. 2013.

Image Citation:

“Twitter Preps for IPO with Acquisition and New Conversation UI.” SiliconANGLE. N.p., n.d. Web. 07 Oct. 2013.

With 7.7% unemployment the UK is going through tough economic times.  Competition for business is getting downright nasty, with price-cutting becoming a key component of business survival.  And no business is excluded from the fray.  Just ask the prostitutes. A recent article in The Economist points out that spending on luxury goods has decreased by 4% since 2007 — and the purveyors of paid sex, a luxury service by all definitions, have felt the financial impact of this decrease.

In the current recessed economy British prostitutes have had to survive with fewer customers in the market and competition from foreign nationals.

But there are some bright spots for those willing to innovate in the world’s oldest profession.  To retain what market share they can, the innovators have diversified to expand their appeal.  For example, they have joined niche markets such as dominatrices, diversified their service portfolio to include phone and web-cam sex, and changed their target audience to include those with less-deep pockets. Apparently, as much as most stores would love to be Saks Fifth Avenue, the real money is made at The Dollar Store.

Perhaps newer suffering industries could take a lesson from the world’s oldest profession.  After all, thousands of years of prosperity are at least an indication that a service provider is doing something right.  Success in business starts with a product that is high in demand,  but market share can be retained or increased by implementing sound business principles, including expanding the service offering, expanding the target market, and keeping costs in line.

Citations:

“Sex Doesn’t Sell.” Http://www.economist.com/news/britain/21578434-old-industry-deep-recession-sex-doesnt-sell. N.p., 25 May 2013. Web. 6 Oct. 2013.”United Kingdom Unemployment Rate.” TRADING ECONOMICS. N.p., July 2013. Web. 06 Oct. 2013.

Image Citation:

“Street Credibility.” The Guardian. N.p., n.d. Web. 07 Oct. 2013.

Shaun McCutcheon is in a legal battle with the Federal Elections Commission (FEC). He believes that the FEC limit on individual political donations of a measly $123,200 diminishes his “core political speech.” His main argumentis that the current legislation “prevent[s] folks who want to get involved from having the same ability to get involved and support candidates that big union [Political Action Committees] have.” (1)

While Mr. McCutcheon has a valid point that the restrictions on political spending by individuals limit their rights to get involved with as much money as they might want to contribute, the limits are within reason to reduce the possibility of elections being bought by a small group of wealthy individuals. Is there corruption in the current system of PAC funding that allows unlimited donations to PACs and Super PACs, as long as the donor is revealed?  Certainly, it is politics after all, where the animal kingdom is dominated by snakes, rats and weasels. But corruption in one system does not provide an argument for the creation of other systems with equal or greater potential for corruption.

To quote Meredith McGehee, “if the Supreme Court sides with McCutcheon, all it will have done is open new routes for corruption without closing the old ones.”

Siding with McCutcheon will only increase the corruption that comes from unlimited funding. If McCutcheon wants to give more money he should stop wasting his time on legal fees and focus his resources on a Super PAC that reflects his views.

Citations:

(1) Mears, Bill. “Money and Politics High Court’s First Big Case This Term.” CNN. Cable News Network, 06 Oct. 2013. Web. 06 Oct. 2013.

“Quick Answers to General Questions.” Quick Answers-General Questions. N.p., n.d. Web. 06 Oct. 2013.

Image Citation:

“Getting Money Out of Politics: Putting the Public First.” Living Green Magazine. N.p., n.d. Web. 07 Oct. 2013.