3 Predictions About Twitter's Forthcoming IPO

Twitter is finally going public; let the feeding frenzy begin.

With a Tweet, the social network that pioneered micro-blogging—and brought balance to a social web increasingly controlled by a guy who once said, "I don't know why ... they 'trust me' ... dumb f*cks" (will Zuck ever live that down?)—announced that it had filed its S-1 paperwork in preparation to go public this Fall.

Certainly, few companies have transformed the way the world communicates—not to mention journalism itself—as Twitter has since it launched in 2006. Seven years later, the company that brought freedom of speech to a wider public will be owned by that same public.

But if you follow the news, you already know that.

A rash of predictions are about to erupt in the coming days. As we await details following Thursday's announcement of Twitter's S-1 filing, I'd like to pose 3 of my own:

1) The easy one: Twitter will be valued at around $20 billion

Reports say Twitter will make around $580 million in revenue this year. Facebook, at the time of its IPO, was at $3.7 billion, with $1 billion being net. Simple proportion tells us Twitter will clock in around $17 billion. Add a little because markets are looking favorable, and comparable stocks Facebook and LinkedIn are both up right now.

It's still insane that a company could be valued at 40-50 times its annual revenues (Revenues! Not even profit!). However, analysts expect Twitter to double and pull in over $1 billion in 2014; at that growth rate, a TWTR investment might actually pay itself off pretty quickly. And those who understand venture capital know that valuations rarely line up with revenues but instead with investor expectations and market forces anyway.

2) Social media will continue to fragment; Twitter won't budge

A month ago, a New York teen wrote a guest post on Mashable.com entitled, "I'm 13 and None of My Friends Use Facebook", garnering more than 50,000 shares. Various other recent web articles and blogs have documented the slipping grasp Facebook has on its early adopters and young people in developed nations.

Frankly, it's surprising that Facebook has stayed on top for so long, considering the legacy of burn-out personal social networks before it. And while Facebook certainly won't go away anytime soon, niche networks like Pinterest, Snapchat, Vine, and Instagram (yes, it's Facebook, but it's still Instagram) are siphoning people away from the "one social network to rule them all" that Facebook once was. And with a big missed opportunity in Facebook Platform and the subsequent fall of Zynga, I predict that Facebook will slowly lose its savor over the next few years.

Meanwhile, both LinkedIn and Twitter will hold steady. Each has continued without the day-to-day involvement of its founders (a crucial sign of long-term vision and viability as independent entities). Each has the power of near monopolistic domination in a niche use case (business and shortform media, respectively). And neither has a credible threat to its existence in sight. We'll see Twitter adoption continue to climb, revenues rise, and a whole lot of fragmentation happen in the social media realm around it.

3) Twitter's IPO Will Be More Like LinkedIn's Than Facebook's

As you might tell, I'm a bit down on Facebook, despite the obviously massive impact it's had on the world for good. But unlike the world's largest social network, Twitter's history has been relatively controversy-free—from a business perspective, that is—and I expect that to be reflected in the way it runs its IPO process. Aside from the frequent service outages that plagued its early years, Twitter has always run maturely, with the broader public mission of empowering people to communicate as its guiding light.

Summing up what was perhaps the messiest IPO in recent memory, Daily Beast wrote last year, "Will it ever occur to people that so many who rub up against Facebook later notice that their watch and wallet are missing?" The trouble over disclosures, the "pump and dump" allegations, and the "unfriendliness" (to put it politely) to retail investors that occurred during Facebook's public offering are unlikely to be repeated with Twitter for two reasons: a) Investors learned their lesson; and b) Twitter as a business has always been more conservative, buttoned up, and long-term-focused to expect such shenanigans to occur at the IPO finish line.

Contrast Facebook's immediate post-IPO stock plummet and slow return to sobriety with LinkedIn's near doubling of its stock price in the first day of trading (and subsequent phenomenal performance, overall), and you see what a mature social networking company with a steady business model can do in the public markets. Will Twitter's Day 1 performance be quite as stellar as LinkedIn's? I doubt it. But I think it will look more like LinkedIn on Day 2 than Facebook.

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Most importantly to me, Twitter has done amazing things in the last seven years for journalism and storytelling, a craft and a skill that are essential to democracy and sustainable business; I'm happy to see its creators and supporters arrive at a well-deserved financial outcome.

What do you think?

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Shane Snow is Chief Creative Officer of Contently. He writes about media and technology for Wired, Fast Company, Ad Age, and more, and tweets at @shanesnow.