Twitter poised to blow away Facebook IPO?

CEO Dick Costolo takes an even better approach to his business than Mark Zuckerberg.

By TheStreet Staff Jun 8, 2012 10:34AM

By Rocco Pendola

 

I'm on record as a Facebook (FB) bull. At this point, I still own only my token lot of three shares, but the time will come to buy more.

 

Even though I see FB becoming one of the market's next $100 stocks, I am more excited by the near certainty that Twitter will go public at some point. Everything Mark Zuckerberg and Facebook have done well, Dick Costolo and Twitter have done better.

 

For most intents and purposes, Zuck and Costolo speak the same language. They're entrepreneurs who put the user experience first, everything else second. But for one reason or another, Costolo appears to do a better job of walking the walk, at least with regard to timing the move to go public.

 

Few of us are inside baseball enough to know why, but Facebook probably IPO'd a shade or three too soon.

 

Cynics and haters will claim it had to pull the trigger because the business was about to implode. I doubt it.

 

Others will point to Zuck's relative inexperience. I can see this. Plus Zuckerberg founded Facebook, while Costolo did not pioneer Twitter. He's been there before (not at Twitter, but "there" as in being big-time) in several previous lives. As such, he might feel less urgency to pop the cork and unleash the real wealth.

 

Regardless of the reasons, it appears Costolo will not take Twitter public until the business is not only ripe but strong, sustainable and, at least relative to Facebook, saddled with fewer near- and long-term question marks.

 

While I expect Facebook to sort out its real issues -- as well as its media-generated and overhyped nonissues -- Twitter heads into that seminal moment in time much better positioned. Costolo deserves credit for this.

 

Consider the "issue" (I think it will quickly be viewed in retrospect as a nonissue) of mobile monetization. Costolo shocked the world the other day when he said Twitter generated more revenue via mobile than through the desktop on "many days" in the last quarter.

 

Costolo explained that Twitter has "an ad platform that already is inherently suited to mobile." And it is. I'm not sure what reasons Costolo would give, but it feels natural to see an ad come across my Twitter feed. It feels less so on my Facebook feed. I cannot necessarily put my finger on exactly why, but standard ads on Twitter do not look out of place.

 

It's somewhat similar to an advantage Pandora (P) has. Users expect and tolerate a relatively small number of commercials while listening to radio, particularly if the ads are targeted and relevant.

 

That's another thing Costolo seems intent on perfecting: the relevance of the Twitter experience to each user. He's made leaps and bounds in the right direction, but Costolo has not brought Twitter "there" yet. Twitter will not go public until it brings its "A" game, all of the time, on mobile as well as the desktop.

 

If you've used the Facebook and Twitter mobile apps, you likely agree you cannot compare the two. Twitter blows Facebook away, not from an "I like Twitter better than Facebook" standpoint but from design and functionality perspectives.

 

Twitter is also growing like a weed. Revenue could hit $1 billion in 2014. That would indicate a roughly sevenfold increase over last year's total of $139 million. When you go public, you want to be in the middle of that type of hyper growth.

 

If growth moderates at Facebook, as expected, Zuckerberg or Sheryl Sandberg (or whoever) will have to spend the company's entire first conference call as a public entity defending the business model and the future. That's just not a good spot to be in several months post-IPO, particularly after an offering that did not fire all that smoothly.

 

At Twitter, Costolo will boast about high double-digit (and maybe even triple-digit) revenue growth. He can comfortably set expectations well before the growth slows, stalls or merely takes a pause.

 

That's the position you want to be in during your first year as a public company. And Costolo knows this. You want to be not only growing at a rapid clip but growing at a rapid clip while your business runs on all cylinders and the user experience is top-notch. Facebook is building its mobile app to what it hopes will be satisfaction on the fly. That's not good.

 

As a stock, Twitter might just perform like the Teflon stock LinkedIn (LNKD). I just hope the company comes up with a better ticker symbol than the obvious "TWIT."

 

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

 

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14Comments
Jun 8, 2012 2:19PM
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fb will never be a 100.00 dollar stock . would put market value near msft dont think fb will ever make msft kind of money.
Jun 8, 2012 1:51PM
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Facebook will fade out like Yahoo in the next few years.  No one wants to hold the Facebook stock for long, even the Facebook insider,  they just want to take the cash first, and jump out of the sinking boat, claim back their original citizen to avoid tax, don't you see their face laughing on the day of opening May 18, 2012   :)  wow  easy monney
Jun 8, 2012 1:52PM
Jun 12, 2012 2:47AM
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Rocco... did Mark Fedex you the Kool Aid straight to your home or are you secretly on their payroll???
$100.00 never.

Jun 8, 2012 1:55PM
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I have heard people on FB lie to each other. Say it ain't so!!!!
Jun 8, 2012 12:51PM
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Two wrongs don't make a right. Twitter has Elitist-only attributes. Having a way to communicate beyond the reach of all people that can say anything about anyone without validity is a violation of our fundamental Rights. Law Firms, Virtual Foolishness and Financial Houses should never be publicly-traded. They have no viable assets.
Jun 8, 2012 1:46PM
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The plot thickens. The crooks are stealing from the thieves. No honor among thieves anymore I guess. I thought congress was going to do a special investigation to see how the corporations that got ripped off in the farcebook scam could recoup their loss. Hey, no special investigation needed, pay 'em back with that taxpayer money. Too bad the pocket is empty with the big hole in the bottom courtesy of the financial system. Don't work Big B will print more money and paste on a QE too. And the next new scam on the way "The Twitter IPO" that'll blow farcebook away. Jump on in, come on down, tripple your losses that'll be covered with taxpayer money that doesn't exist.

 

Peace 

Jun 12, 2012 11:17PM
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im buying up CB radios hoping it's the next "big thing".
Jun 8, 2012 11:30AM
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People down here are looking at each other listening to this socialist, arrogant village idiot look at the American people in the eye and lie his behind off....Can't wait to get rid of this worthless piece of garbage....Please Lord, we need real change this November
Jun 8, 2012 1:53PM
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Oops, I think that should be "Don't worry" not "Don't work". I don't think it will work either.

 

Peace

Jun 9, 2012 6:47AM
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I don't know FB my be alright down the road I own 4 shares like this guy just in case, But truth to tell it's a little much for me I tell you one I like right now how about EGHT Founded in 1987 this isn't some fly by night dot com company, making a EPS of .94 a PE of 4.02 sales up 22% and income up a huge 966% These guys are HOT stock depressed from a 52 week high of 5.44 to just over 4.00.  These guys are doing something right check it out for yourself
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