Thursday marked the announcement of Twitter’s IPO filing. Instead of taking a more formal approach, they announced it in a tweet which went out to 24 million followers. The Twitter IPO has been speculated for a long time now and is one of the most anticipated stocks of 2013. The firm tweeted, “We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.”
An S-1 form is a financial document that U.S. companies file with the Securities and Exchange Commission in New York as part of the formal IPO process. The confidentiality of the IPO filing was possible due to the Jobs Act 2012 which
‘protects’ emerging companies wanting to go public. Companies that rake in less that $1 billion in revenue are considered as emerging companies, according to the Act. The new law also allows Twitter to keep all documents confidential up until 21 days before the IPO “road show”, when the firm seeks the interest of investors and fund managers.
The tech world and many financial analysts will be looking at this IPO closely. Facebook went public last year and did not do as well as expected. The stock only traded above its IPO price of $38 in July last year, more than 2 months after going public. Twitter accrues most of its revenue from advertisements and has said that it was moving towards mobile
advertising. The firm purchased MoPub, a startup focusing on mobile advertisments just days before the IPO announcement tweet.
Twitter, now 7 years since its birth, has over 200 million users who send more than 400 million tweets a day. Financial analysts are valuing the company at $10 – $15 billion, about 30x revenue. Research firm eMarketer estimates that Twitter will generate $582.8 million in worldwide ad revenue this year, up from $288.3 million in 2012. We await to see the outcome of this IPO and the success of Twitter as a company. This simple and ingenious website may be the next big thing in the dotcom industry.