Twitter announces their IPO filing via a 140 character tweet. (Click Image To Enlarge)
Twitter Inc. said it has confidentially submitted an S-1 form to the Securities and Exchange Commission to begin the process for an initial public offering, a long-awaited move by the microblogging service.
In a tweet on Thursday, the San Francisco-based company said,
"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."
A Twitter spokesman declined to comment.
Goldman Sachs is the lead underwriter on the planned initial stock sale, people familiar with the matter said.
One person familiar with the matter said other banks are expected to join Goldman in managing what is expected to be one of the highest-profile IPOs since social-networking site Facebook went public last year. Deals like Twitter's planned IPO are a bonanza for the Wall Street banks, both in the fees they collect in underwriting the sale and the prestige of handling the high-profile offering.
Twitter's decision to tweet about its confidential IPO filing is perhaps fitting for a company that gave people a platform to broadcast private moments to the world. The company quickly followed its IPO disclosure tweet with another: "Now, back to work," the company wrote, with a photo from Twitter offices of employees working at their desks.
A securities rule change put in place last year allows companies with less than $1 billion in yearly revenue to file initial IPO paperwork confidentially. The advantage for companies is they can keep their financial results secret until they are closer to pitching their stock to investors.
Some startup advisers said the confidential IPO option is making some young companies more willing to accelerate plans.
Twitter's filing is a major milestone for a company that launched in 2006 as an extension of a podcasting company, and now has become a global brand with more than 200 million users each month, and the power to chronicle protest movements in Egypt and Jay-Z concerts in New York.
But questions remain about whether Twitter will prove lasting, both as a service and as a business. New digital services, such as photo-sharing app Instagram and messaging service Snapchat, have emerged to challenge Twitter as a primary tool for people to stay in touch with friends and congregate around major events. Instagram, now owned by Facebook, recently said it reached 150 million monthly users.
As a business, Twitter CEO Dick Costolo has been in his post for three years and made it a priority to turn Twitter's popularity into a financial strength. Twitter started selling ads on its service—it calls them "promoted tweets," among other names—and research firm EMarketer Inc. estimates Twitter will generate $583 million in advertising revenue this year.
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Clark Fredricksen, a vice president at research firm EMarketer Inc., said.
"Their growth trajectory over the last few years has been very, very strong. Twitter was able to monetize mobile user growth much more effectively than most other digital platforms."
He pointed out that a higher percentage of Twitter's ad revenue comes from mobile devices compared with Facebook.
Still, people inside of Twitter and veteran advertisers question whether the company can ever grow to the scale of Google, which had $50.2 billion in revenue last year, or Facebook with $5.1 billion.
In its IPO, the spotlight will be on Twitter not to repeat the mistakes of Facebook's botched offering. With the social network's much publicized but disastrous IPO in May 2012, the stock price dropped in its first day as a public company and trading hiccups that day left investors holding stock they didn't want. Twitter executives have said they are wary of repeating the mistakes that dented Facebook's IPO process and its reputation.
COMMENTARY: According to most Wall Street analysts, and this social media technologist, Twitter was not expected to file for an IPO until early 2014. This was before the latest stock rally and Facebook shares exploded shortly after its one year IPO anniversary. This obviously had a bearing on the decision to file papers for an IPO now.
Twitter only began monetizing its users in the second half of 2010, when it ended the year with estimated revenues of $45 million. On the other hand, Facebook had revenues of $3.71 billion at the end of 2011, the year before it filed its IPO, and six years after it began selling ads.
With the launch of Twitter's advertising API and mounting suspicions of an IPO, it's a good time to look at how the social site grew to this point.
Twitter Users and Traffic Stats
Between Q2 and Q4, account ownerships grew from 408 million to 485 million. Active users increased from 208 million to 288 million in that period. According to internet market research firm GlobalWebIndex, that makes Twitter the fastest-growing social platform in that period.
GlobalWebIndex created an infographic that not only shows Twitter growth between Q2 and Q4 of 2012, but it also breaks down Twitter's data by country, device, activities, and key demographics.
See everything you need to know below. Click to enlarge or see the original here:
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Twitter could potentially do a billion dollars in revenue next in 2014, according to Eric Jackson of Ironfire Capital. Yahoo! Finance reported Jackson saying
“The chatter is that (Twitter) is going to do $600 million in revenue this year (2013) and a billion in revenue next year (2014).”
Twitter Valuation Based on Secondary Market
GSV Capital Corp. values its shares in Twitter at around $18.50 per share,Bloomberg reported on May 11, 2013, valuing the social service at – using a diluted share figure of 530 million – around $9.8 billion.
We know how GSV values its Twitter investment as it is a public company, and thus listed the following in its most recent 10Q:
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This figure is large, but not surprising. Blackrock recently purchased shares from Twitter employees at a price that valued the company at $9 billion. The Wall Street Journal tried to make the case that Twitter was worth $10 billion using some odd math, but that the company is prized among investors is no secret.
GSV owns a mere 0.3% of the firm, but its filings represent a rare look into the current thought-worth of a private company.
Twitter Valuation Based on Revenue Multiplier
How much will the revenue multiplier be for Twitter’s valuation when it goes public? A valuation of 15 to 20 times the company’s revenue is possible. The high-end revenue multiplier — if Twitter can manage a billion dollars in revenue in 2014 — would give Twitter a valuation of $20 billion…
The share numbers are the same, but the ‘Fair Value’ figure falls. It’s a small change, down about 2.5% from earlier highs, but at the prior price, Twitter’s valuation would have crested the $10 billion mark. What caused the easing in Twitter’s price isn’t clear.
Courtesy of an article dated September 12, 2013 appearing in The Wall Street Journal, an article dated March 27, 2013 appearing in Advertising Age, an article dated February 27, 2013 appearing in Business Insider and an article dated May 11, 2013 appearing in The Next Web
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