When Twitter filed an S-1 request with the US Securities and Exchange Commission a month ago, Wall Street had regarded the news with wall-eyed incomprehension. An S-1 filing is financially tantalising. All it reveals is that the company plans an IPO under $1 billion. It does not have to show its hand immediately, leaving room for speculation. The punters went bananas, predicting that Twitter would go public next year and that its market cap would lie somewhere between $6 billion and $20 billion. These were really wild guesses bracketing Facebooks IPO of $16 billion last year.
The company has released key figures and declared risks since then, but the market is not much wiser. Twitter is a fine example of the distance which separates Wall Street from Silicon Valley, the distance between people who value the present and those who understand future value. Wall Street had looked mainly at profits (huge losses, actually. Earliest profits expected in 2015) and revenues. In the first half of the year, the company had earned $221 million in advertising and $32 million from data licensing. In comparison, Facebooks six-month revenues are set to cross $2 billion.
In October, some analysts had called down the curtain on the era of social media. Facebook and Linkedin have had IPOs and YouTube was swallowed whole by Google. After Twitter, it was suggested, future investments would be attracted by post-social technologies as yet unknown. This assessment is rather bizarre because the era of social media has just begun. But it is unwittingly accurate, because Twitter is misclassified. It is more than social media. Its future is to be a wrapper for media and advertising. What is the value of Facebook in the average Tunisians imagination Vast, no doubt, but it has its limitations. Facebook was made for the computer, not the phone, and not made with news in mind. What is the value of Twitter to the journalist who uses it as a tool to promote his or her byline, the head of state or business who uses it to fight a media war, the artist or activist who is denied media space altogether Unqualifiedly vast.
Twitters eventual game is power and influence, invaluable assets which are left strictly alone by the valuation process. Its been that way since the dotcom bust of the late-Nineties, when too many valuations fattened by power projectionssuch as the power to influence the choices of large populationshad turned out to be just so much PowerPoint. But even before acquiring bells and whistles like the micro-video sharing service Vine, the plain vanilla core of Twitter had helped to organise a revolution or three, besides unprecedented protests in India. Opinion is divided on who are its native denizens, people like Barack Obama and Lady Gaga, or fringe steel bands and the guy who believes that he is Hitlers moustache. But clearly, it has ripped open the envelope of social media and stepped out.
As for its value, if the worlds most powerful newspapers had been rigorously valued in their early years, they would have been shut down as useless. Besides, we are using the first iteration of Twitter. Google Glass, Facebook, Pinterest, Flipboard and other media innovations are also works in progress. Their final forms may be altogether different, and they may interact in unanticipated ways to create future media networks. But we can be absolutely sure that the pipe that brings media to us, whether new or traditional, will be Twitter. Last month, Nielsen began tracking tweets about US TV shows and how they influence viewer behaviour. It is still an imprecise system based on hashtags, but it is a sign of the central role that Twitter will play in the businesses of media, advertising and the big data that they will generate. This microblogging service is destined to be invaluable.