OFF THE WALL: Will the public follow Twitter stocks? Will # be the new $?

By Rene Pastor

Twitter is going live on the New York Stock Exchange on November 15 in an initial public offering which will be the biggest thing since Facebook went public on May 18, 2012.

How will Twitter’s IPO compare with Facebook’s? The questions that will have to be asked of Twitter are the same ones that confronted Facebook. Twitter has 215 million users, about one-fifth the size of FB which claims 1 billion users. Can Twitter turn their users into a steady stream of revenues, or in FB-speak, can it monetize its
user base?

Many have expressed doubts about Twitter’s actual subscriber base. There are those who suspect that celebrities have been buying Twitter followers to inflate their fan base.

I see a lot of bots, which are nothing but automatically generated spam. In its IPO filings, Twitter said false or spam accounts for less than 5 percent of its traffic. But automated accounts — or bots — which send tweets regularly are considered active users even if there may be no human being attached to those accounts. The company hopes to raise over $1 billion from its IPO.

I’ve been a Twitter user for five years now. I tend to binge-tweet. I would go bang out a succession of 140 character thoughts for days, and then go for weeks in silence.

In contrast, I go to my Facebook homepage everyday because it is the way I keep tabs on friends, find out what my niece, Emma, is singing, and how my siblings in Manila and Pittsburgh are doing.

Despite its popularity, Facebook did not take off until it could prove it had the ability to earn millions from mobile ad revenue. Last year, it reported zero revenue for mobile ads in one quarter. This year, the same quarter saw revenue soar to over $600 million.

Some analysts believe Twitter can duplicate Facebook’s record. Maybe. Others are not as optimistic. The skeptics are turning to the fact that Twitter has never turned a profit and yet is asking the people to buy shares of the company.

Techstars CEO David Cohen told CNNMoney. “If Twitter went away today, people would just turn to Facebook. If Facebook went away, people would start screaming.”

I was on wait-and-see mode with Facebook for several months. I needed to be convinced it could sustain its viability. I got in late but still early enough where my shares are now up almost 40 percent.

It looks like I will be taking the same tack with Twitter. I don’t mind missing out on the IPO, don’t care that some investors get in on the ground and make quick money on it. There are just too many lingering questions.

‘Off the Wall’ is a weekly column on the stock market. The comments expressed here are the author’s personal views and are not meant to recommend the buying or selling of stocks.

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