Now that Facebook (FB) has gotten above its IPO price, it’s about time for Americans to demean ourselves in the name of grabbing shares of any hot social media IPO that the investment banking community can thrust upon us.
In this case, Twitter going public is actually for the best, but not because it will result in a financial windfall for those lucky enough to get an allocation. It almost certainly won’t. Twitter needs to go public because at the moment there aren’t enough internet mobile advertising-related stocks to go around. Seriously.
It’s not just that Facebook’s ability to drive over 40% of its advertising revenues to mobile demonstrates that Twitter is a viable business, it’s that investors are chasing shares of companies that aren’t. Over the last month any company with an app that eked out an earnings beat has seen its stock rip 20% or more. Nothing against Yelp (YELP) but they didn’t reinvent the wheel. The stock may or may not be worth $50, it just didn’t do anything worthy of getting there in one fell swoop.
Having another mega-cap social media play with a viable business model to trade on the open market will take some of the air out of the inflating bubble before it pops. It’ll also make Twitter employees richer than Croesus.
“I think they gotta go,” says Eric Jackson of Ironfire Capital, about the highly anticipated IPO. “The time is right. Social media is on fire. Mobile stocks are on fire. Besides Facebook, Twitter is the king of that area.”It’s hard to say exactly what Twitter looks like as a business model but it’s obviously going to work. Twitter is in many ways more compelling than Facebook. It has wider appeal and more immediacy. Twitter is built to last, or at least it seems to be.
For now that’s good enough. Look for a Twitter IPO sometime early next year. Let’s just try to be a little less hyped up about it this time.
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