At the start of the year, I predicted that Google would acquire Twitter before they IPO’d. I’m admittedly cutting this one a little fine. But I still think an acquisition would be a better outcome for Twitter than going public.
There have obviously been some major IPO successes (LinkedIn and Salesforce being cases in point). Although everyone’s now heralding Facebook as part of that category, it’s been a rocky road for them. Plus we’ve all watched the Zynga rollercoaster as they moved from social to mobile gaming.
Over the Summer there was also the collapse of Zattikka (a games publisher). Frontier Developments (games development and technology) recently also went public. Neither graphs are pretty.
Zatikka Stock Price
Frontier Developments Stock Price
The fundamental lesson here is that going public when your business model is still in transition is not a good idea. When even you can’t say precisely how your model is going to play out, the last place you want to be is on a public market. Even on a good day most analysts won’t fully grasp the subtleties of your company.
Twitter is going public considerably earlier than Facebook (which wasn’t exactly smooth sailing) with significantly less revenue and users. Are they mature enough to be public?
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