Twitter files for IPO
14 Sep 2013
Twitter said in a tweet on Thursday night that it had submitted a confidential document to the SEC with plans for an initial public offering of stock.
CNBC quoted sources as saying that Goldman Sachs was the lead underwriter.
Other underwriters are expected to be named at the time when the S-1 filing is made public. Twitter made no further revelation nor did the company reveal any additional details.
The IPO of the company valued at around $10 billion, is likely to prove Silicon Valley's most anticipated debut since Facebook's public offering last year (See: Facebook to open trading today on Nasdaq).
The confidential filing came under the JOBS act, which allows the company to work with regulators on its plans before making them public. The S-1 would have to be made public at least 21 days before the company started its "roadshow" to invite participation from large investors.
Companies need to have less than $ 1 billion in revenue to file in secret. Twitter was on track to post $583 million in revenue in 2013, advertising consultancy eMarketer said. Twitter would not need to disclose they made the filing, but chose to do so.
Twitter's revelation comes only a few days following Facebook shares staging a recovery from the plunge they suffered after that company's troubled IPO in May 2012 to touch an all-time high.
As of close yesterday, Facebook rose 17.8 per cent from its $38 offering price. In a remarkable about turn CEO Mark Zuckerberg, who had said companies needed to avoid going public for as long as possible, he was too afraid of going public you have to stay focused on do the right stuff.
A Bloomberg report said a public listing would mark a watershed moment in Twitter's journey from its 2006 origins as a way for web users to publish short messages, to hundreds of millions of members worldwide and to join conversations on global affairs, sports and entertainment.
The report said chief executive officer Dick Costolo would need to convince investors that the offering would fare better than internet IPOs from Facebook, Groupon Inc, and Zynga Inc, which all ended up losing half their value within six months of their listings.
Bloomberg quoted Byron Deeter, a partner at Bessemer Venture Partners in Menlo Park, California, in an interview as saying this was obviously one of the seminal IPOs, that the industry had been waiting for.
Some social media stocks though had done better though, with LinkedIn soaring to almost $250 a share from its $45 offering price in May 2011. Yelp was up 325 per cent since its March 2012 IPO, although Groupon was down over 41 per cent since its public debut in November 2011.
Bloomberg said Twitter's IPO, though much smaller than Facebook's, could still generate tens of millions of dollars in fees with the underwriting mandate itself. If the company were to sell 10 per cent of its shares, or $1 billion, underwriters could look to a fee pool of $40 million to USD 50 million, assuming an overall fee cut of 4 per cent to 5 percent, according to Freeman & Co.
