The Twitter IPO: The numbers behind the hype (opens in new tab)

Can we please stop drawing conclusions about tech companies from their revenue figures? At this point it's a tired trope on hacker news that technology companies' valuations can't be explained by traditional equity analysis techniques.

Technology equities have highly variable price to earnings rations because of the expectation of greater growth in the future. This expectation means investors are effectively speculating about the future growth of the company, rather than making decisions based on classic quantitative methods like you would apply to an older company in a better understood industry. Applying these methods ignores this dynamic and also buys into the myth of the quantitative analysis that's so appealing to mathematically minded geeks like ourselves.

I submit that the only thing posts like these really accomplish is letting the author stroke his or her by using big words and apparently clever concepts, while simultaneously making it clear that they're misunderstanding the market.

Twitter is a good middle term 5-10 year investment, but not a great long 10+ year investment. I have no idea if it is a good buy with the pricing they have.

Twitter reminds me of AIM (AOL Instant Messenger). Back when AOL was a big deal, AIM was how you chatted with people and the network effects of that were incredibly huge. Everybody, every brand, everything was on AOL. Then, the landscape shifted and high speed internet made AOL irrelevant. However, AIM was still around and a lot of people used it for years after they quit AOL.

Twitter's big risk isn't the next few years where it's still hugely popular and integrated with media everywhere, the risk is in 5+ years when something else comes along. Will twitter have the staying power of Yahoo, Google, and Facebook, or will it be more of a AOL/MySpace kind of thing?

I really have no idea, but I wouldn't bet on Twitter for more than 5 years.

That's an interesting take, I think Twitter has long term growth potential but like the article says it's not Google and I don't think it ever will be. When Google filed for IPO it already had one of the biggest ad networks online, whereas Twitter is still growing.

Honestly I'm surprised Twitter has filed so early, I'd have thought next year would be more likely. If I was investing (and I'm not), I'd mark it as a risky venture, the business is clearly changing at the moment but it's still certainly growing in the metrics and it has an increasingly large amount of visibility in mainstream media. They do seem to have a strategy though.

I'm very skeptical of the twitter IPO for a few reasons: - Monetizing their stream is not easy - Few advertisers in their network are raving about ROIs - My experiences as a platform developer have been better on other platforms - Their support for their ecosystem is lukewarm at best - The vulnerability to other mediums (insta, snap, etc etc) in the key markets for advertisers are also very risky - Facebook I think is still going to crush them from an experience standpoint.

I was expecting a more in depth look at the different markets these two play in, like how much was the search market worth and how much was Google capturing at IPO vs. twitter's relative numbers.

I think really the hard part in comparing these two companies are how users derive value from the two services.