Twitter’s $1 billion dollar question

Sep 13, 2013

Dan Primack was a senior editor at Fortune from 2010 to 2016. He was also the author of Term Sheet, Fortune's daily newsletter about deals and dealmakers.

FORTUNE -- After Twitter announced yesterday that it has filed IPO documents confidentially with the SEC, a friend asked me the following:

"Companies that file confidentially must have less than $1 billion in annual revenue. So why is everyone getting so excited? Zynga was on pace for more than $1 billion in annual revenue when it went public, and look what happened there."

I understand the comparison, given that Twitter is the last of the aughts Internet giants to go public. But take a look at the following top-line numbers for the other four, for the calendar year they went public (ranked from highest to lowest):

  • Facebook (fb): $5.09 billion
  • Groupon (grpn): $1.61 billion
  • Zynga (znga): $1.14 billion
  • LinkedIn (lnkd): $522 million

Had these companies gone public in an era of confidential filings, only LinkedIn would have qualified.

Now let's look at each company's current market cap (ranked from highest to lowest):

  • Facebook:  $109 billion
  • LinkedIn: $29.3 billion
  • Groupon: $7.8 billion
  • Zynga: $2.4 billion

Notice what happened to LinkedIn there? And it wasn't about revenue growth velocity at the time of IPO, since Groupon was the fastest and Facebook was the slowest.

To be clear, I'm not saying that less revenue is better. Instead, this is simply to point out that Twitter's public market reception won't be solely determined by the only piece of financial data we currently have available.

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