Twitter files for IPO, analysts value company at $10 to $20 billion

By on September 13, 2013, 11:45 AM
twitter, social, ipo, wall street, micro-blogging, social network

Twitter is kicking into motion one of the most anticipated initial public offerings in the tech industry since Facebook. The popular microblogging service yesterday announced -- via a Tweet, no less -- that it has confidentially submitted an S-1 to the SEC for a planned IPO. Details are still scarce on how many shares of the company will be offered, the timing of the offering and the price of the shares.

Company executives had long dodged questions about going public, claiming they were more focused on the long term and creating lasting value than near term optimization of revenue. The Guardian speculates it is likely that Twitter was forced to file for an IPO because it had enough private investors that regulations required it. Under the Jobs Act a company in the US has to go public if it has more than 2,000 private investors.

This Act, which stands for Jumpstart Our Business Startups and became law in 2012, also provides a vague hint at Twitter’s revenue, as only companies with less than $1 billion in annual revenue are allowed to file IPO plans confidentially and keep financial data under wraps until three weeks before marketing its stock in a “road show”. The road show is one of the final steps in the IPO process, in which the company gives presentations to potential investors, and is typically followed by pricing of the shares and the first day of trading.

For what it’s worth, the service is known to have over 200 million active users and is believed to have generated more than $100 million in revenue in the final quarter of 2012. Twitter makes its money primarily by selling ads, and is increasingly becoming an attractive venue for advertisers due to its timeliness and topicality, with people actively tweeting alongside specific events such as TV shows, concerts, and breaking news. According to eMarketer, Twitter will rake in in $583 million in advertising revenue for 2013 and hit $1 billion in 2014.

Twitter is currently believed to be worth between $10 billion to $20 billion. That’s a far cry from Facebook’s $100 billion valuation last year, but going public at this stage leaves them more room to run up revenue and valuation, which is very important when it comes to Wall Street. The timing is also noteworthy as investors are recovering confidence in mobile and social, with Facebook’s shares hitting a record high this week at $44.75.




User Comments: 7

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howzz1854 said:

I see the so called "analysts" has gone a little soft this time.

MilwaukeeMike said:

The Guardian speculates it is likely that Twitter was forced to file for an IPO because it had enough private investors that regulations required it.

Wow, Guardian, way to remember why Facebook had to go public and pass it off like it's some huge insight.

Twitter is currently believed to be worth between $10 billion to $20 billion. That?s a far cry from Facebook?s $100 billion valuation last year.

That's because FB went public at $38 and within two weeks it was down to $25. Unless your name is Google selling ads isn't a terrific way to bring in revenue. it's easy to think of FB and Twitter like MS and Apple because they are all tech companies, but having a real product to sell is what makes all the money.

1 person liked this | howzz1854 said:

It's obvious that analysts these days are dishonest and just there to make a quick buck by talking up the valuation of the IPO in the beginning, cash in on the initial hype, and stick the average joe with the bill. 2 years ago when my buddy and I were sitting in the coffee shop talking about FB IPO, I remember all he was saying was how great it was, that it was the next big thing. I just remember all I was saying was there was no way it was worth 38 bil, let along 100 bil, in fact I used the exact words that I wouldn't even touch their stock with a 10ft pole that it wasn't even worth 20 bil. the intrinsic value of the company just wasn't there.. too bad too few people realized that, and many got burnt. pisses me off when people go to supermarket and compare prices over a dollar, and they can't even bother to look into the stock they're buying.

tonylukac said:

What about the Molex $7 billion buyout this week by Koch? Or was that the opposite? That's a tech company right near where I live. You heard of Molex connectors?

JC713 JC713 said:

I hope it doesnt turn into another Facebook IPO.

Chazz said:

I think twitter has a little more staying power than Facebook. That instant worldwide notification that it brings is so nice. Finding out Tony Romo isn't seriously hurt while halftime is running saved me like 20 minutes of panic attack. So useful

davislane1 davislane1 said:

Unless your name is Google selling ads isn't a terrific way to bring in revenue. it's easy to think of FB and Twitter like MS and Apple because they are all tech companies, but having a real product to sell is what makes all the money.

Playing the middleman can be very lucrative as well, and that's where Twitter has more viability long-term than Facebook; they have a platform better setup to work with this type of business. Will they be able to compete on a Google level? No. But that doesn't mean they don't have the ability to carve out their own spot in the advertising business. Though, the 10-20 billion valuation does feel a smidge high.

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