Here we go again another social media network is making its company public with the hope of selling stock and making more money. The initial paperwork has been filed for a Twitter IPO.
So why should you care?
An IPO is the Initial Public Offering or “The first sale of stock by a private company to the public.” It was just last May Facebook offered its IPO, a highly anticipated move that had investors on the edge of their seats and after a year of bleak numbers, things are definitely looking up now.
Why do companies go public? There are two primary reasons, particularly in the case of startups like Facebook and Twitter (well, they were startups once). First, the initial funders (typically venture capitalists) want to exit (exit means end the relationship with the company and collect both the initial funds invested plus, hopefully, a profit) and have their investment pay off. Secondly, large companies need funds, and selling stock in the company is a great way to raise those funds. So it’s not terribly surprising that Twitter has decided to go public.
We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.
— Twitter (@twitter) September 12, 2013
But what does this mean to the average Twitter user? Well, let’s go back to Facebook for a moment. After the IPO, Facebook had to work harder to earn a profit and this meant creating new products and opportunities for advertising. Hence the redesigned news feed, made bigger and brighter to better insert ads, the “promoted” post options on pages, and ads on Facebook’s mobile app.
So you can expect to see the same from Twitter; more ads and changes in design and functionality to better facilitate ads. But you can also expect to see improvements in functionality, and that is good news.
What do you think about Twitter’s IPO? Will you be trying to get your hands on some stock?