Twitter has filed its S-1 with the Securities and Exchange Commission. The social networking site could raise $1 billion, though that figure is subject to change. It will trade under the ticker "TWTR," the exchange was not mentioned in the filing.
In the first six months of 2013, Twitter reported $253.6 million in revenue, showing a net loss of $69.5 million. Revenue for all of 2012 totaled $316.9 million.
A possible concern, however, is that average cost per ad engagement decreased steadily since 2012, falling 46% in the second quarter ended June 30 over the year-ago quarter. Advertising accounted for 87%, or $221.4 million, of total revenue in the first-half 2013.
The site has more than 218 million users and hosts 500 million tweets a day. Investors have a minimum of three weeks to review the documents, meaning Twitter could go public as early as Thanksgiving.
Meanwhile, social networking heavyweight Instagram divulged its advertising strategy to generate revenue for parent company Facebook on Thursday. Instagram will begin displaying advertisements in a user's feed in the coming months, though the company assures these will be sparse and non-intrusive during the testing phase.
For the first-half of 2013, advertising accounted for $2.85 billion of Facebook's total $3.27 billion in revenue. For the full year, analysts expects $7.37 billion in revenue.
In other Facebook-related news, the social networking giant announced plans to build a campus village near its headquarters. The development will include a 394-unit apartment block, shops and bars.
Facebook shares rose 2.1% higher to $50.22, as of 10:24 a.m. ET. The S&P 500 is up 0.34%.
"The company continues to work on its monetization strategy for all of its business segments, with this move as a step in the right direction. We see the company achieving 30-40% earnings, revenue and EBITDA growth in its upcoming 3Q," said Jim Cramer and Stephanie Link in their subscription service 'Action Alerts Plus'.
TheStreet Ratings team rates Facebook as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate Facebook a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FB's very impressive revenue growth greatly exceeded the industry average of 22.7%. Since the same quarter one year prior, revenues leaped by 53.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although FB's debt-to-equity ratio of 0.18 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 10.22, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for Facebook is currently very high, coming in at 87.04%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 18.36% trails the industry average.
- Powered by its strong earnings growth of 285.71% and other important driving factors, this stock has surged by 144.37% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- When compared to other companies in the Internet Software & Services industry and the overall market, Facebook's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: FB Ratings Report
Professional online network LinkedIn is lower for the week, down 3.58% since Monday. Wunderlich Securities recently raised its LinkedIn price target to $280 from $250 on predictions LinkedIn's Talent Solutions business will perform better than expected in the third quarter ended September 30.
LinkedIn shares are 0.18% lower to $244.62, as of 10:24 a.m. ET.
TheStreet Ratings team rates LinkedIn as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate LinkedIn a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The area that we feel has been the company's primary weakness has been its disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Internet Software & Services industry and the overall market, LinkedIn's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for LinkedIn is currently very high, coming in at 86.45%. Regardless of LNKD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LNKD's net profit margin of 1.02% is significantly lower than the industry average.
- Compared to its closing price of one year ago, LNKD's share price has jumped by 115.26%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- LinkedIn reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LinkedIn increased its bottom line by earning 19 cents vs. 11 cents in the prior year. This year, the market expects an improvement in earnings ($1.53 vs. $0.19).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 32.8% when compared to the same quarter one year prior, rising from $2.81 million to $3.73 million.
- You can view the full analysis from the report here: LNKD Ratings Report
Written by Keris Alison Lahiff.