Twitter’s announcement in September that they would be filing for an IPO is a reoccurring headline in the News. I found this story interesting to research after our previous class discussing private and public companies, and the financial statements public firms are required to produce.

Twitter has recently provided the public with financial statements that have caused analysts to question the company’s future success on the Stock Market.

Twitter has approximately 200 million users, however, these users don’t provide any profit, leaving the company to rely on advertising as their main revenue source. In a recent Globe and Mail article, Omar Akkad wrote that this dependency on advertiser revenue presents a challenge for Twitter. Even though their revenue has grown substantially in the past several years, Akkad writes that “it’s not yet clear its growth trajectory is enough to translate into big profits” (Akkad). This statement is followed by a quote from a Sauder professor of finance, Kai Li, who claims that “looking at a valuation simply from a revenue perspective is a mistake” (Akkad). Twitter has valued itself between $10-billion and $13-billion according to the company’s filling.

It is interesting to read these statements and opinions and compare them with the ideas discussed in last week’s class that involved calculating share holders equity, and reviewing the ‘value’ of certain brands. I recommend that you check out some articles on this story: “The Short Message from Twitter’s IPO“, “Twitter Takes First Steps to go Public“.