Twitter stock opened trading at $45.10, instantly soaring 80% above its initial public offering price. This means that having a lot of users is much more important to investors than having any sort of plan to become profitable. We are back to 1999 and eyeballs are in vogue. This is manna for messaging apps like WhatsApp, LINE, KakaoTalk, WeChat, Kik, Viber, Tango, Nimbuzz and BBM.
Some of these apps are already wildly profitable — LINE, for instance grossed $26 million in July alone just from the mobile game apps it promoted. Some, like BBM, are still in the process of bulking up their user bases and mapping out content distribution strategies. Within a year or so, all of these messaging apps will be distributing virtual stickers, games, music, possibly videos, comics and astrology tips.
But profitable or not, they all have relatively giddy growth numbers, with even mid-tier names like KIK and BBM about to hit 100 million registered users. Viber has recently reached 200 million users. Now that these companies are all gearing up to become full-fledged content distribution platforms, they are the closest thing to Facebook and Twitter the mobile app industry has. In the super-sophisticated Korean smartphone market, consumers have 3-4 messaging apps on their phones. This is probably where the rest of the world is heading to; consumers seem to have tolerance for multiple messaging apps. Some shine as game platforms, some as group message systems for friends, some as photo-messaging hubs.
This latest Wall Street frenzy of social network investment started in the summer when Facebook revealed a sudden acceleration in its mobile advertising revenue. Facebook’s share price doubled between July and September, setting the stage for the orgiastic Twitter IPO.
After this titanic duo, the most prominent companies benefiting from the mobile advertising explosion are the messaging app vendors. LINE is about to have its IPO in Japan and it had been anticipated to approach $28 billion even before today’s Twitter mania. After today, LINE clearly has a shot at topping $30 billion in market cap on its first day.
This will turn WhatsApp, Kik, BBM, Tango and other popular messaging apps into prime takeover candidates. There is no shortage of major tech companies who missed the stand-alone messaging app boom, from Microsoft and Amazon to Yahoo and Disney. All have content plans that could benefit from a new, vigorous mobile distribution platform. If the stock markets don’t cave in, the year 2014 could witness an epic frenzy of major messaging app mergers and acquisitions.
