Twitter's 2013 IPO: Capital Raised, Stock Trends & Performance
This paper examines Twitter's 2013 initial public offering (IPO), which raised approximately $1.8 billion through the sale of 70 million shares at $44.90 per share. Drawing on SEC filings, industry analyst commentary, and academic sources, the paper reviews Twitter's history and industry position, its reported financial growth following the IPO, and the debate over nonfinancial metrics used to justify investor valuations. It also assesses post-IPO performance, noting the stock's rise to $67.50 in early 2014 and its subsequent decline to approximately $25 per share. The paper concludes that while Twitter's revenue growth was real, inflated investor expectations rooted in unaudited nonfinancial metrics contributed to a significant stock price correction.
- Introduction: Overview of Twitter's 2013 IPO and paper scope
- Overview of Twitter and Its Industry: Twitter's history, platform features, and industry context
- Key Financial Facts from SEC Filings: Revenue growth and SEC filing data post-IPO
- How Successful Was the IPO in Raising Capital?: IPO pricing, capital raised, and analyst skepticism
- What Happened to Twitter After the IPO?: Nonfinancial metrics controversy and investor concerns
- Stock Price Trends Since the IPO: Stock price rise and fall from 2013 to 2015
- Conclusion: Summary of findings and outlook for Twitter stock
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What makes this paper effective
- Integrates primary sources (SEC Form 10-Q filings) with secondary academic and journalistic sources, giving the analysis both empirical grounding and critical context.
- Structures the argument progressively — from company background, to IPO mechanics, to post-IPO outcomes — creating a logical narrative arc that builds toward the conclusion.
- Balances optimistic revenue data with skeptical analyst commentary (e.g., Peter Garnry, SEC Chair Mary Jo White), demonstrating awareness of multiple perspectives.
Key academic technique demonstrated
The paper effectively uses direct quotation from authoritative sources — industry analysts, SEC officials, and corporate filings — to support claims rather than relying solely on paraphrase. This technique strengthens credibility while keeping the argument anchored in evidence rather than opinion.
Structure breakdown
The paper follows a clear six-section structure: an introduction framing the research questions, a company and industry overview, a financial data section drawn from SEC filings, an evaluation of IPO capital-raising success, a post-IPO performance assessment, a stock price trend analysis, and a brief conclusion with a forward-looking projection. Each section builds on the previous one, maintaining thematic continuity throughout.
Introduction
Launched in 2006 and headquartered in San Francisco, Twitter leveraged its increasingly popular social media platform into an impressively successful initial public offering (IPO) in 2013. The IPO generated enormous attention from investors and media alike, as well as $1.8 billion in capital through the planned sale of 70 million shares of stock at a closing price of $44.90 per share (Henry and Rosenthal 2014). To determine how the company generated so much attention — as well as billions of dollars in capital — this paper reviews the relevant literature to provide an overview of Twitter and the industry in which it competes, a discussion of important financial and other facts based on the company's Securities and Exchange Commission (SEC) filings, and an analysis of how successful the IPO was in raising capital. An assessment of the company's performance since its 2013 IPO is followed by an analysis of the trend in Twitter's stock price. Finally, a summary of the research and key findings are presented in the conclusion.
Overview of Twitter and Its Industry
Today, Twitter is one of the most popular social media sites, trailing only Facebook in the number of monthly active users (MAUs) who use the service on a daily basis (Edosomwan, Prakasan, Kouame, Watson, and Seymour 2011). Although widely regarded as a fairly recent industry, the history of social media networks dates to the mid-20th century, with so-called "phone phreaks" who gained unauthorized access to corporate voice mailboxes to produce the first "blogs" and "podcasts" (Edosomwan et al. 2011). Social media networks gained increasing popularity following the introduction of email in the late 1960s and the Internet in the 1990s (Edosomwan et al. 2011). From the outset, Twitter has been in the vanguard of innovation — an attribute that has materially contributed to its success. As Edosomwan and his associates note, "In 2006, Twitter came into existence. Twitter gained a lot of popularity first because it offered more different options such as micro-blogging and secondly because it was used by some celebrities" (80).
Today, the company operates as a worldwide platform that serves as a readily accessible outlet for real-time public discussions and self-expression for a global audience (Twitter Profile 2015). Although the company's range of services and products continues to expand, its current offerings include the flagship Twitter platform, which facilitates real-time communications of user-generated text and multimedia content between members, as well as a mobile application that allows members to create and distribute short-duration looping videos (Twitter Profile 2015). Beyond these core offerings, Twitter also features promoted services and products — including promoted tweets, accounts, and trends — that allow marketers to advertise their brands, services, and products, as well as subscription access to the company's real-time data feed (Twitter Profile 2015).
Moreover, Twitter features a wide range of network tools, public application program interfaces (APIs), and embeddable widgets that developers can use to provide and distribute customized content on the Twitter platform (Twitter Profile 2015). As stated in the company's most recent Form 10-Q quarterly report, "Our goal is to reach the largest daily audience in the world through our information sharing and distribution platform products" (Twitter Form 10-Q 2015: 3). The company has been increasingly successful in achieving this goal, as discussed further below.
Key Financial Facts from SEC Filings
The company has been highly effective in growing its global business and continues to enjoy steady increases in revenues. Twitter's overarching goal since 2013 has been to expand globally, and the capital generated by the IPO has significantly contributed to this effort. Twitter's most recent Form 10-Q quarterly report states: "We have already achieved significant global scale, and we continue to grow. In the three months ended June 30, 2015, we had approximately 316 million monthly active users (MAUs) spanning nearly every country" (Twitter Form 10-Q 2015: 4). The company also estimates that the actual total global audience for its online content may be as high as two to three times the number of actual MAUs (Twitter Form 10-Q 2015).
Twitter reports significant financial growth following its 2013 IPO across its several SEC filings. For example, the company's Form 10-Q filed in August 2015 reports revenues of over half a billion dollars ($502.4 million) for the three-month period ended June 30, 2015 — representing an impressive 61% gain compared to the same period in 2014 (Twitter Form 10-Q 2015). The company also reported increases in mobile application revenues, which accounted for 88% of Twitter's advertising revenues (Twitter Form 10-Q 2015). Similarly, revenues for the three-month period ended September 30, 2014 totaled $361.3 million, representing a 114% increase versus the same period in 2013 (Twitter Form 10-Q 2014). Taken together, these trends suggest that the price paid by investors during the company's IPO was at least partially justified by underlying revenue growth.
Conclusion
Although Twitter continues to enjoy significant growth in its global product and service lines and reports sustained increases in revenues, the research showed that the $44.90 per share paid by investors in 2013 during Twitter's IPO was a wise investment for only a few months — when the stock reached a high of $67.50 per share. For the many investors who anticipated continued growth, however, their $44.90 per share investment eroded over the following year and a half, settling at around $25 per share. In reality, this outcome was anticipated by many industry analysts at the time of Twitter's IPO, including most notably the SEC Chair. Nevertheless, it is reasonable to conclude that with continued judicious investment in its most profitable business lines — particularly mobile advertising — and careful stewardship of the company's global resources, Twitter's stock could reverse its recent downward trend and regain its immediate post-IPO levels.
Works Cited
Curtis, Sophie. "Twitter IPO: How It Happened." The Telegraph, 7 Nov. 2013. Web.
Edosomwan, S., Prakasan, S. K., Kouame, D., Watson, J., and Seymour, T. "The History of Social Media and Its Impact on Business." Journal of Applied Management and Entrepreneurship 16.3 (2011): 79–83. Print.
Henry, Theresa, and David A. Rosenthal. "Socially Awkward: Social Media Companies' Nonfinancial Metrics Can Send a Mixed Message." Journal of Accountancy 218.3 (2014): 52–59. Print.
Hughes, Alan. "What to Look for in an IPO: Earnings, Cash Flow, and Revenue Growth Are Most Important." Black Enterprise 44.10 (2014): 30.
"Twitter Form 10-Q." Yahoo Finance, 7 Aug. 2015. Web.
"Twitter Form 10-Q." 6 Nov. 2014. Web.
"Twitter Profile." Yahoo Finance, 2015. Web.
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