Five questions about the Twitter IPO
Twitter's logo on a computer screen in London in September 2011.(Photo: Leon Neal, AFP/Getty Images)
Social media giant Twitter is the latest tech company generating buzz on Wall Street after filing an initial public offering[1] on Thursday.
Here are five questions about Twitter's impending Wall Street debut:
1. Why was Twitter able to keep its filing quiet?
Twitter announced in an initial tweet that it "confidentially" submitted its S-1 for a planned IPO. Thanks to a new Securities and Exchange Commission rule — The Jumpstart Our Business Startups (JOBS) Act[2] — companies that pull in less than $1 billion in revenue annually can confidentially file an IPO with regulators.
As far how much revenue that is for Twitter, the annual revenue range is between $500-$600 million for this year, according to analysts cited at Business Insider[3] and Venturebeat[4]. Research firm eMarketer says Twitter revenue is forecast to hit $1 billion by next year.
2. What is the value of Twitter's IPO?
The company is valued between $9-$10 billion[5], but the IPO could be worth roughly $26-$28 a share, or $14 billion, says GigaOM, which cites "sources familiar with Twitter's thinking."
3. Why file now?
Investors have grown increasingly interested in IPOs. Renaissance Capital says 131 companies filed IPOs this year, up 44%.
Also, the recent financial success of social media company Facebook — whose stock has rebounded after faltering for months and months after its IPO last year — may have prompted Twitter to act sooner. "There was no point going out until folks could see an upside for a social media property," analyst Rob Enderle tells Computerworld[6].
4. How will Twitter fare on Wall Street?
Gartner analyst Brian Blau tells PC World[7] going public will give Twitter "a sustainable future." However, the track record of tech companies that recently went public has been mixed. LinkedIn interest has boomed, with its stock becoming one of the hottest on Wall Street. Meanwhile, Groupon shares sank since its first day of trading in 2011, forcing the company to oust its founder and CEO. Since the leadership change, Groupon has slowly rebounded.
5. What's next?
This registration statement is the first step in an IPO that typically takes three to six months, but can take longer. According to the Associated Press, Twitter could make its IPO plans public as soon as next month, barring any stumbling blocks during the review process. Roughly three weeks later, Twitter can start a road show, where it pitches the company to potential investors.
References
- ^ http://www.usatoday.com/story/money/business/2013/09/12/twitter-ipo-filing/2806703/ (www.usatoday.com)
- ^ http://www.sec.gov/spotlight/jobs-act.shtml (www.sec.gov)
- ^ http://www.businessinsider.com/twitters-financials-and-ipo-price-2013-9 (www.businessinsider.com)
- ^ http://venturebeat.com/2013/09/12/twitter-finances/ (venturebeat.com)
- ^ http://www.usatoday.com/story/money/business/2013/09/12/twitter-ipo-filing/2806703/ (www.usatoday.com)
- ^ http://www.computerworld.com/s/article/9242381/Now_is_good_timing_for_Twitter_s_IPO (www.computerworld.com)
- ^ http://www.pcworld.com/article/2048667/going-public-gives-twitter-a-sustainable-future-analysts-say.html (www.pcworld.com)
- ^ http://twitter.com/bam923 (twitter.com)