With hundreds of millions of users around the world, Twitter (TWTR) is one of the world's most popular social media sites around. In fact, it's one of the 10 most-used social-media platforms in the world. Users post tweets and interact with each other using 280 characters or less.

The site has become a place for people to debate, share ideas, and is a popular venue for people to share ideas—notably U.S. President Donald Trump. Since the presidential election of 2016, the site has become one of the most popular places to share and break important news—both political and otherwise.

Since going public, the company has tried to stay ahead of the game by making acquisitions which would allow it to stay ahead of the game, especially in the face of competition from other companies like Facebook and Snapchat. Some of these have been great, but others, not so much. This article looks at the company's history, how it became what it is today, and its financials, along with some of the biggest companies it owns.

Key Takeaways

  • Since going public, Twitter has made a series of acquisitions to try to remain competitive in the social media landscape.
  • Twitter acquired Magic Pony Technology in 2016 to improve its machine-learning capabilities.
  • Periscope was acquired by Twitter for $100 million of stock and cash.
  • The company's largest acquisition— $479 million for digital advertising platform TellApart—has been a losing venture for the company.

Twitter History

Twitter was founded in 2006 by a group of people including Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams. The idea for the company came from Dorsey, who wanted to create an SMS-based platform through which people could communicate. Twitter initially began with some tens of thousands of users, limiting users to 140 characters per tweet.

The company went public on Nov. 7, 2013. It planned to raise $1 billion through the initial public offering (IPO) and exceeded that target by making $1.8 billion by issuing 70 million shares at $26 a share.

The site currently has about 330 million users.

Financials

Full year results for the company in 2018 were reported on Feb. 7, 2019. The company reported $3 billion in annual revenue along with net income of $1.2 billion. Both figures increased from the previous year.

Gnip

Gnip was acquired by Twitter in 2014 in a cash and stock deal worth more than $134 million. The company was a social media application programming interface (API) aggregation company. It was among the first social media API-aggregation service providers and provided data to Twitter long before the acquisition. Twitter extended its own data platform as well as its existing public API as a result of the acquisition.

The startup company was founded in 2008 in Boulder, Colorado, and had customers in about 40 different countries. Before the acquisition, Gnip also provided data to other, competing social media platforms including Facebook and Tumblr.

Magic Pony Technology

Twitter acquired Magic Pony Technology in 2016 in an effort to improve its machine-learning capabilities. The London-based company developed neural network systems for image-related data expansion. The acquisition was valued at $150 million, and both cofounders of Magic Pony Technology were retained in the deal. But the full terms of the deal were not disclosed by either party.

By acquiring the company, Twitter hoped it would improve the delivery of photos and videos across apps. Twitter received technology-related to neural network development and machine learning to enhance video quality, expand a photograph’s size, or develop virtual reality graphics. This isn't Twitter's first time at the machine learning rodeo—the company acquired two other machine learning startups—Whetlab in 2015 and Madbits in 2014.

MoPub Advertising Solutions

In 2013, Twitter embarked on developing a mobile advertising exchange. This kind of advertising appears on mobile platforms with wireless connections such as smartphones and tablets. To do so, Twitter utilized the technology of MoPub through a $350 million acquisition. Headquartered in San Francisco, MoPub hosts the world’s largest mobile advertising server with a real-time bidding exchange.

This marketplace allows for advertisers to automate and scale purchases, while targeting users based on previous web or mobile usage history. At the time of the acquisition, MoPub reported $100 million of pass-through revenue per year. No cash was exchanged in the acquisition, as MoPub received common stock in the deal.

Periscope

Twitter acquired Periscope, the live-video streaming start-up in January 2015 to further develop its video capabilities, including the offering of real-time broadcasting services. The subsidiary launched its own proprietary app in March 2015. It allows users to watch live or previously broadcasted mobile video streams. Just under $100 million of stock and cash were exchanged in the acquisition.

Periscope perhaps became well-known after Rep. Scott Peters live streamed a sit-in conducted by Democrats after failing to get a vote on gun control in the U.S. House of Representatives in June 2016. Peters used his own account after the speaker declared the House was in recess.

TapCommerce

Twitter acquired mobile ad startup TapCommerce in June 2014. The $100 million purchase helped Twitter improve mobile installation and engagement advertisements. Twitter confirmed the acquisition was made to assist in mobile marketing, as TapCommerce assists companies with target advertisements based on prior user activity. The process of retargeting advertisements requires large amounts of data coupled with statistical analysis since mobile devices lack the use of cookies.

TellApart

Twitter’s largest acquisition was a $479 million stock purchase to acquire TellApart in 2015. The digital advertisement platform boosts Twitter’s advertising revenue generated by ads that resemble tweets and encourages users to perform a certain action. In addition, TellApart specializes in targeting users to monitor usage across mobile and desktop devices.

This hasn't been the best acquisition for Twitter. In 2017, the company said it stopped investing in TellApart and deprecated the subsidiary. Twitter officials also said they may need to restructure in the future. The reason? It had negative impacts on the overall business with year-over-year declines since it was acquired in 2015.

Twitter announced it deprecated some of its assets including TellApart, and may need to restructure in the future.

TweetDeck

Twitter acquired TweetDeck in 2011 for $40 million. The platform is a social media dashboard application for management of Twitter accounts. TweetDeck was originally an independent app but was later merged into the social media giant's interface.

“TweetDeck provides brands, publishers, marketers and others with a powerful platform to track all the real-time conversations they care about," a blogpost by the company said of the acquisition. 

The very first version of TweetDeck went live in 2008, three years before Twitter purchased the company. Although it did have mobile versions, the company decided to get rid of them and focus entirely on its web-based applications. It also shed support of all Facebook data in 2013.