Twitter IPO is Wall Street hit but challenges lie ahead

Sky News Australia, Saturday Nov. 9th Full text here

“Kudos to Twitter for orchestrating a highly successful IPO,” said Lou Kerner of the Social Internet Fund. “However, as Facebook showed, an IPO success, or disaster in Facebook’s case, is really just noise in the long term. Twitter’s success as a stock is going to be based on how the company performs.”  Kerner said Twitter “needs to perform extraordinarily well, in terms of user growth, user engagement, and user monetization to justify its price.”

Twitter IPO will be hot but with risks

AFP Sep 13, 2013, 10.56PM IST

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… “It’s not quite Facebook but it’s certainly the biggest thing since Facebook,” said Lou Kerner, founder of theSocial Internet Fund, referring to the May 2012 IPO of the world’s biggest social network. “Social media is very hot, with Facebook hitting an all-time high, and investors are looking for other ways to play that,” Kerner told AFP. Kerner said Twitter will be in high demand because “it is well on its way to becoming one of a small number of ubiquitous platforms used by a majority of people on the planet.”  Underwriters may be cautious about pricing in the wake of Facebook’s debacle last year, which saw a drop of some 50 percent, Kerner said, but with Twitter’s growth, “$15 billion does not seem unreasonable.”  Kerner said Twitter has shown it is a powerful platform for a variety of forms of expression, and “tremendous” for marketing. It is also “well-positioned to be the dominant second-stream platform,” for people watching television and using Twitter for feedback or to determine trends, he said. While there are no guarantees Twitter will remain dominant, Kerner said the more it grows, the harder it will be to unseat.

 

 

Twitter tries to avoid tech IPO trouble

Alistair Barr, USA TODAY2:17 p.m. EDT September 14, 2013

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…. Facebook traded in the private market at $38 to $40 before its IPO and that gave Morgan Stanley and the other underwriting banks confidence that similar valuations could be supported in the public stock market. But the public-market demand did not materialize, according to Lou Kerner, founder of the Social Internet Fund, which invests in start-ups in the private market.  “They’ve learned that private markets can get distorted by low availability of shares to buy,” Kerner says.  Indeed, Twitter has been much more restrictive than Facebook about which investors can buy its shares in the private market, Kerner noted.  Twitter’s valuation has gone as high as $15 billion in the private market, but on very thin trading volume, he added.

“The bankers, having had the experience of Facebook, will not put as much weight on the private transactions to guide their pricing,” Kerner says.

The Social Internet

While I thoroughly enjoyed my time as a Wall Street analyst, compliance issues hampered my ability to blog on SecondShares.  Now that I’m back angel investing, I look forward to sharing thoughts and analysis on the social and mobile companies I refer to as “Social Internet” companies.  Just as the siloed internet companies disrupted the offline leaders (e.g. Amazon v Walmart), Social Internet companies that are BORN social, will disrupt incumbent firs internet leaders.  I first outlined my thesis in the only real thought piece I wrote a year ago.  I now update those thoughts in a deck “The Social Internet“.  While the deck is meant to be given live (which I love doing, as it’s such a fun dynamic topic to discuss), a lot of value can be derived by reviewing the slides.   Enjoy the deck, share it, and I look forward to future posts.

OBL Death & Royal Wedding Mark High Points for Social Media, Advertisers Take Notice

SOCIAL MEDIA BREAKS THE NEWS; AUDIENCE FLOCKS & ADVERTISERS TAKE NOTICE

Last Monday at 10:25 PM EST, Keith Urbahn, a former aide to Donald Rumsfeld, tweeted:

Figure 1: The Tweet Read ‘Round The World

Source: Twitter

From 10:45 PM – 2:20 AM EST, 27.9 million tweets were generated, breaking the record for the highest sustained rate of tweeting at an average of 3,000 Tweets Per Second (TPS).  During President Obama’s address, the rate of tweeting peaked at 5,106 TPS.  Notably, the record rate is 6,939 TPS which took place at New Years 2011 in Japan (a country with advanced smartphone technology).

YouTube views of President Obama’s speech exceeded 5.5 million views (his White House Correspondents Dinner speech got 7.2 million in five days, the most ever for a Presidential speech).

Figure 2: News of OBL’s Death Yielded Highest Sustained Rate of Tweeting Ever

Source: Twitter

While Urbahn’s tweet spread viral news of Osama Bin Laden’s death, Sohaib Athar aka @ReallyVirtual had actually “broken” the story hours earlier, unknowingly live-tweeting the raid from his first person vantage point in Abbottabad, Pakistan:

Figure 3: @ReallyVirtual Tweets OBL Raid Play-By-Play

 

Source: Twitter, via Namesake

Since his tweets were discovered, @reallyvirtual’s Twitter account surged to over 100K followers, from less than 100, and prompted the IT consultant to release a humorous FAQ page where he could direct countless inquiries.

Figure 4: @ReallyVirtual Has Attracted Over 100K Followers Since Tweeting His First Hand Account of the Raid

 


Source: TweetDeck

The previous week witnessed another occurrence of social media’s growing impact on real world events.

Mainstream media took advantage of the content being produced through social media by integrating the user-generated content during the royal nuptials.  Most notably, ABC broadcast the royal wedding live direct from its Twitter feed, while attempting to create an interactive experience between social media and its broadcast.

Figure 5: While The Internet Loved The Royal Wedding, The Flower Girl Was Less Enthused

Source: Today.com

ABC and Twitter came up with hashtags such as #RoyalSuccess and #RoyalMess to describe people’s reactions to dresses and to describe the #RoyalKiss.  Messages posted on both Facebook and Twitter were read from the screen, and a TwitterTracker was used to gauge user engagement in different aspects of the coverage.  As an ABC News executive commented, “Social media isn’t a novelty anymore, and you can’t treat it as such.  It’s not something you can even just do.  You have to constantly iterate and push things forward, and that’s what we’re trying to do.”

Figure 6: ABC Integrated Social Media To Provide More Complete Coverage of The Royal Wedding


Source: Twitter

Large scale planned events like the Royal Wedding or the Super Bowl attract new users to social media platforms and encourage enhanced interactions as users congregate to engage with the event.

Additionally, advertisers are increasingly embracing social media to insert their brands into the conversations around these major events.  We were particularly impressed by Unilever’s Magnum Ice Cream usage of the #RoyalWedding hashtag.

When Twitter users clicked on the #royalwedding hashtag, they were directed to the day’s Promoted Trend, which was sponsored by “Magnum Ice Cream.”  Clicking on “Magnum Ice Cream” then directed Twitter users to Magnum’s Facebook page (which now has over 1 million fans).

Figure 7: Unilever’s Magnum Ice Cream Social Media Campaign Yielded Massive Earned Media Impressions

Source: Facebook

Figure 8: Unilever’s Promoted #RoyalWedding Significantly Outperformed @ClarenceHouse’s #RW2011

Source: Twitter

Figure 9: Unilever’s Campaign Has Resulted In Owned Audience Which the Company Can Reach & Impact

Source: Klout