That Twitter remains unprofitable is not much of surprise, considering the fact that the company's revenue focus up to last year had been small and cautious. The losses are were also to be expected when Twitter used what was until recently an obscure securities regulation that allowed it to file a "confidential" IPO with the SEC that left its financial picture largely undisclosed. The law, Jumpstart Our Business Startups (JOBS) Act, was enacted during the recent recession and was designed to make it "safer" for small companies that had under a billion in revenue to explore going public without the level of immediate scrutiny that comes with an initial filing.
At this point, Twitter has its investors story as settled as it's going to get in the near term.
In any case, the ad industry is likely to be less judgmental about Twitter's stock than investors. And no matter how well -- or poorly -- TWTR trades when the stock starts landing on Wall Street, advertisers are expecting only positive things from the new public company. After all, they've been waiting for years for Twitter to help them figure out mobile marketing and as those quarterly earnings calls get scheduled, Twitter will be pushed by investors to accelerate its revenue production even more rapidly.
That will mean Twitter will not only chart a path with MoPub to develop its mobile ad exchange, but it will be doing a lot more deals with traditional media companies like last month's addition of CBS to the Twitter Amplify marketing program. Twitter introduced the Amplify initiative last year by working with ESPN and Ford. In the first iterations of that program, ESPN would tweet clips sponsored by the automaker. Broadcasters hope that mixing live TV content with Twitter's reach could provide significant brand lift, though evidence has been fairly unclear.
"Twitter is so ingrained in the culture, especially for people under 40, plus its traction in the mobile space in general, only bolsters my confidence in them," said Sean Finnegan, CEO of The C4 Group, a digital consultancy. "And I'm not alarmed that they're still in the investment mode and are putting their resources toward that. As they build out a wider user base, I'm certain that there's only big growth ahead of them."
If there are any qualms about Twitter, it's the question of how it's able to impact brands. But as the common platform for content distribution, Finnegan said he expects much of Twitter's concentration to be centered on publishers first, with ad support following.
"As a public company, Twitter will not only be better able to accelerate its expansion among users, publishers and advertisers," Finnegan added. "And with the added attention and disclosure, they'll have to explain their value to the marketplace. Ultimately, as that happens, Twitter becomes much less confusing to the public at large, as opposed to the media savvy users who make up much of the posting."