There’s a lot of hype recently about Twitter’s upcoming IPO. Many people in the social media technology space are hyping up the upcoming IPO deal as the salvation of social gaming and social networking sites. Don’t believe it. Why? Twitter is basically living off the fumes of Facebook. Think about it. This Twitter IPO would not have happened if Facebook’s stock still remained stuck in the $17 range. Now that Facebook has breached the $50 mark, people are all excited once again about social networking ventures.
The truth of the matter is that these types of startups have always been there and that many of them have found but they were languishing. They are stagnant and they have massive question marks because let’s face it, social networking, unless your company’s name is Facebook, is still a big question mark to many people. Is it a purely traffic play? Are we talking about mostly traffic volume or is there like a grand vision that will allow this company to scale and would stand the test of time? These are precisely the questions being asked of Twitter because Twitter, for all intends and purposes, is solidly in the shadow of Facebook. How? Facebook is ten times bigger than Twitter in terms of sharing. In other words, while Twitter can boast off re-tweets, Facebook shares blow the re-tweets volume out of the water. In terms of traffic, it doesn’t even come close.
Twitter gets twenty times less traffic than Facebook. Customer based? Is this even a question? Facebook has thirty times the customers on Twitter. In other words, Twitter is just a small player in a very big pool but most of that pool is taken up by this battleship called Facebook. How does Twitter get out of its shadow? Its business and advertising model still have to converse with the fact that Facebook is pioneering all those advertising models. It remains to be seen whether it’s a good idea to buy Twitter stocks unless they come up with a visionary CEO that looks at Twitter as the glue of micro-communication and network influence. It would be a tough sell for people who are looking to buy something for the long haul.