Twitter IPO: Microblogging Site Files for Public Offering

Twitter unveiled Thursday that it has filed for a planned IPO.

The social networking site said Thursday that it has recently submitted its S-1 filing to the SEC for a planned IPO. Photo: The Telegraph

In a small post left on its own website, Twitter announced that it has filed “confidential” documents to begin the process for its long expected IPO.

An initial public offering would probably mark a milestone for Twitter, which has about 200 million users and created a global online communication culture. However, the service hasn’t proved itself as successful business such as Google or Facebook.

By the way, Facebook has clawed its way back to its $38 IPO price in July, Reuters reports, and the stock is at a record high after touching $45 this week.

According to Mx Wolff of Greencrest Capital, Twitter should break even this year and is on track for 40 percent annual growth at a $1 billion annual revenue run rate.

“It’s completely conquered mobile. It has an enormous social network. It’s becoming a key utility as a second screen to TV and it’s literally the first draft of history,” Wolff said.

“Normally a company like Twitter would have been public for some time,” he added.

“It’s maybe a little earlier than some people suspected. A lot of people suspected first quarter of next year,” said Carter Mack, president of JMP Group Inc., a San Francisco investment banking and asset management firm.

He went on, saying: “It’s been a terrific IPO market for technology-related companies this year.”

Being after tough control of its CEO Dick Costolo for the past few years, the famous messaging service’s top priority has been its popularity into an ad business.

Through ads on its service dubbed “promoted tweets,” Twitter is predicted to take in $583 million in ad revenue during this year, says EMarketer Inc.

“Twitter has already become the pulse of the world for breaking news and information,” said Josh Elman, a former Twitter executive, who owns shares in the company and now is a partner with venture-capital firm Greylock Partners. “I am excited for the business that has been built to support that.”

By the way, some say that Twitter was the first to prove that in-stream ads could be a viable way to make money in the mobile era.

“There was a lot of concern about whether they’d ever be able to insert advertising into their site,” said Forrester analyst Nate Elliott. “They’ve shown it can be effective. They offer in many ways better measurement for marketers than larger companies like Facebook.”

Twitter’s debut in IPO could generate millions of dollars.

The Huffington Post writes: “Assuming it sells around 10 percent of its shares, or $1 billion, underwriters could stand to divide a fee pool of $40 million to $50 million, assuming an overall fee cut of 4 percent to 5 percent.”

But the benefits for banks that underwrite the deal would likely be far-reaching.

“Some companies will say, ‘We liked the way you handled Twitter, and we want to come to you first when we do our IPO,'” said David Menlow, president of IPOFinancial.com.

“It’s not only bragging rights,” Menlow said. “It’s getting through the front door, which will line up banks for other transactions done after that, like debt financings and M&A.”

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