Ahead of Twitter’s highly anticipated stock debut, Charles Sturt University (CSU) information and communications technology lecturer Mr Ken Eustace has examined the pulling power of the social networking company.

 

Twitter boasts more than 200 million monthly users sending over 400 million tweets daily and the company hopes to raise up to $US 1 billion in an initial public offering.

 

Mr Eustace from CSU’s School of Computing and Mathematics said it’s difficult to gauge the potential business value of Twitter stock in an investment portfolio.

 

“Twitter users may understand what they value most about the medium - ranging from self expression, following an event, pursuing a political agenda to marketing a product,” he said. “But it is harder for investors to understand what is the product or service Twitter offers beyond advertising revenue.”

 

Mr Eustace said some clues may be gained by examining the strengths and weaknesses of the company, along with its technology and processes.

 

“It is important that Twitter differentiate itself from the other social networks as observed by its acceptance by the traditional media as ‘the micro-messaging service’ of choice,” he said.

 

“You can see this in the use of Twitter as a news or messaging service on radio and television networks. Such a relationship opens up a future with the mutual co-evolution of Twitter and the traditional media companies, underwriting the value of each other.”

 

Mr Eustace said that it is also important to understand how Twitter works, beginning with the way that social relationships and connectivity occurs in social networks.

 

“Twitter was the social networking site that started gathering its social network data in a format that was developed as the ‘is following’ and ‘is followed by’ feature,” he said.

 

“Good ideas spread fast, so later the other sites like Facebook and LinkedIn added a similar community-building tool. The connections between Twitter, Facebook and LinkedIn added to the complexity of the social network trust patterns that exist for business.”

 

Mr Eustace said Twitter has the benefit of learning from the experience of Facebook, which listed on the Nasdaq stock exchange in May 2012.

 

More than 570 million Facebook shares traded in the first day, setting a new record for a US stock debut, but in the months following the company’s share price slumped and took more than a year to recover.

 

“The real business value of Twitter shares may be based on a process of mutual co-evolution with the traditional media companies, initiated and enhanced by any partnerships that develop with the TV industry,” said Mr Eustace. “That coupled with the continuation of its value as a rapid and always online information service to the wider community is likely to generate much interest when Twitter shares begin trading.”