Twitter filed for an IPO this past week. In order to do so, the social media company had to report past earnings and losses. While some of the numbers that Twitter reported were a testament to the company's amazing growth over the years, Twitter also reported some rather big losses.
This morning, Twitter's loss reports are making news rounds, but is this really such a big deal?
Why Some Losses Are Normal
Twitter reported that the company saw a gain of $253.6 million in the first half of 2013. But, losses totaled $69.3 million. Those losses have some investors feeling a bit worried, though that's not completely necessary. Form a business perspective, it would have been somewhat odd if Twitter had reported gains throughout. It's normal for companies to report some losses, that's just how the cookie crumbles.
Twitter does have another task set before the company now, though. Even though some investors are willing to overlook the losses reported, Twitter execs still have to prove to potential investors that the company can continue to grow. This is an endeavor that might be hard to achieve.
Twitter's Growth Plans
Presently, Twitter makes most of its money through advertisements. But, advertisers aren't likely to continue working with the social network if ads are more profitable. This is a problem that Twitter now faces: how to make advertisements better, so that advertisers will see Twitter as a valuable advertising space.
If Twitter can show investors that advertisers want to spend money to work with Twitter, the company may have a fighting chance when it comes to proving the network's worth. This is where Twitter is at right now - trying to show investors what the company can do as far as raking in profits goes. If Twitter succeeds in proving its worth to investors, that's a good thing.
Should You Invest In Twitter?
Is Twitter a good investment? As with any investment, it's crucial that Twitter prove a realistic and achievable revenue plan. Once that's lined up, it's up to you to decide if Twitter's plans are logical and worth your dollars. By the way things are looking, though, Twitter will be another valuable IPO.
Does the fact that Twitter is going public do anything to change the social service for users? Not right now; but you may see more highly targeted Twitter ads in the near future. That means that some of those advertisements may start popping up in your Twitter feed - if Twitter can find a way to entice advertisers, that is.
What are you thoughts on Twitter? Is this company worth the high valuation? Or, has Twitter's gain in revenue streak run out? Companies like Twitter have to continue to prove that they can earn money, and that's not an easy thing to do - especially when a world of investors is watching your every move. Will you invest? Let me know what you think about Twitter's IPO in the comments below.