Analysts expect Twitter's stock to price above $23 per share when the company goes public Thursday, but the real question becomes how the company going public will influence advertising services in the future.
While the company has yet to turn a profit, Twitter may see success based on becoming the next Internet utility -- similar to Google, Amazon and Facebook, according to RBC Capital
Markets analyst Mark Mahaney.
The company will trade under the ticker TWTR.
"The advantage of a TWTR investment is that Social Network Monetization has already been proven (FB), Twitter is a natural beneficiary of the single biggest Internet trend today (Mobile), and Facebook comparisons suggest potential engagement monetization upside," Mahaney explains in a research note.
The stellar endorsement leading up to the company's IPO Thursday does warn against a "somewhat unproven management team." Few of its senior executives have experience running public or large companies.
The execs might not have a lot of experience, but Mahaney has high hopes for Twitter's advertising business. He explains how its advertising revenue could hit $150 billion by
2016, and pegs the opening stock price at $33. The potential could accelerate the company's revenue growth by 123% year-on-year.
An RBC Capital survey of 1,400 Twitter users suggests that 86% of users plan to maintain or increase their time spent on Twitter, and another RBC survey of 600 online marketers suggests Twitter has the third-best return on investment among major Web platforms, behind Google and Facebook. Best of all, more than 70% of its ad revenue comes from mobile.
Sterne Agee analysts estimate the opening share price between $23 and $25 -- up from between $17 and $20 -- but it could hit as high as $27 per share.
Earlier this week, comScore released the top smartphone properties and application for September 2013, ranking Twitter's mobile app among the top 15 applications for September 2013, with 21.1% market share, iOS and Android platforms.
Aside from Twitter's mobile presence, the company's strength resides with the younger demographics at a time when TV is losing its grip on advertising, according to Joe McCormack, CEO of social advertising company Adquant. It's about capitalizing on real-time advertising through sponsored tweets.
Investors will get their chance to purchase Twitter stock Thursday morning, when the company begins trading on the New York Stock Exchange.