140 characters. More than 200 million active users. 500 million tweets per day. ZERO profit.

Twitter hopes to raise up to $1.6 billion in an IPO. Here are three challenges Twitter faces.

One: Twitter must keep its large user base active and growing. A Reuters/Ipsos poll found that more than a third of those registered on Twitter don't use it. Compare that to Facebook, where only 7 percent don't use the site.

Forrester Research analyst Nate Elliott says a small user base loses the network effect that defines social media.

SOUNDBITE: NATE ELLIOTT, PRINCIPAL ANALYST, FORRESTER RESEARCH (ENGLISH) SAYING:

"The challenge is making the number of users grow so it lives up to their place in the public imagination. According to our survey data, less than one-fourth of U.S. online users go to Twitter every month. It's not a bad number, but it's far behind what Facebook claims as active users in the U.S."

Two: Prove its value to marketers.

SOUNDBITE: NATE ELLIOTT, PRINCIPAL ANALYST, FORRESTER RESEARCH (ENGLISH) SAYING:

"If they can offer marketers the right tools and the right processes and insights based on those tools to measure the value Twitter is driving as a platform, then a lot of marketers are going to be very happy. If they can't, marketers might decide to spend their time elsewhere."

Three: Twitter needs to diversify its revenue sources beyond advertising and data licensing.

Gartner research director Brian Blau says Twitter should take advantage of its mobile roots, working with merchants to tweet users with marketing messages as they walk by their stores.

Just before its IPO, Twitter is borrowing a page from Facebook. This week, tweets began automatically previewing pictures and videos on the timeline. Making the text-based platform more visual could make Twitter more appealing to users and advertisers.