Twitter plans to go public

Details are sketchy because SEC rules allow a company with less than $1 billion a year in revenue to delay disclosing information. But Wall Street thinks the company may be worth $10 billion.

By Charley Blaine Sep 12, 2013 7:12PM

Twitter CEO Dick Costolo © ERIC GAILLARD/Newscom/RTRUpdated: 7:22 p.m. ET

 

One of the most highly anticipated stock offerings will hit the market soon: Social-networking company Twitter says it's going public.


The company that limits text messages to 140 characters (the number of characters in the paragraph above) said Thursday it has filed the documents for a public offering. 


The limited capacity means users can send out messages, or tweets, by the bucketful. And they do. Some users disclose they're going shopping. Others use Twitter to link to news stories elsewhere.


There wasn't a lot of detail from Twitter. The company said (not surprisingly) in a tweet that it filed its preliminary Form S-1 document to the Securities and Exchange Commission. The entire text reads: "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."


That tells us one thing: The company's revenue is less than $1 billion a year. It also means it won't have to file detailed documents until it starts to pitch its shares to investors three weeks before the IPO actually occurs.


Nonetheless, the Twitter filing is creating lots of interest on Wall Street. It's the first really big technology IPO since Facebook's (FB) in May 2012. The company is expected to sell 10% of its shares, raising $1 billion in the process -- and suggesting the company is worth at least $10 billion.


That is potentially a smaller valuation than Facebook, whose IPO raised more than $100 billion. The Facebook IPO proved problematic. Orders to buy shares weren't executed. The Nasdaq's computers crashed. Plus, there was some tension between investors and founder Mark Zuckerberg. The shares went public at $38 and fell to as low as $18.03. The shares finally closed above $38 on Aug. 2 and finished Thursday at $44.75.


Wall Street is hyperventilating because the Twitter IPO means millions in fees and prestige. Goldman Sachs (GS) is already known to be the lead underwriter. Money-management firms are also excited because of the wealth that the IPO will unlock among Twitter employees.


In an IPO, a company must disclose a lot of information about itself, including financial statements -- revenue, balance sheets and cash flows. It may tell investors who runs the company, who the directors are. It must describe the business and disclose its major shareholders. But under a 2012 law, those disclosures can be delayed if the company meets specific criteria. The biggest is the $1-billion-a-year threshold.


Twitter was created in March 2006 by Evan Williams and Jack Dorsey. Williams helped found Blogger. Dorsey has founded a number of companies, including Square, the payment service. The CEO now is Dick Costolo (pictured). He once thought of a career in improvisational comedy but has been an entrepreneur in his own right.


Twitter was launched in July 2006. By the end of 2012, it had more than 500 million users who generated 340 million messages daily. The site handles more than 1.6 billion search queries a day.


It has been one of the fastest ways to disseminate news and information. Twitter has been used to organize protests, sometimes referred to as "Twitter Revolutions." These include the 2011 Egyptian revolution, 2010–11 Tunisian protests, the 2009–10 Iranian election protests and the 2009 Moldova civil unrest. The governments of Iran and Egypt blocked the service in retaliation.


It also is a platform that sends out erroneous information about everything from company financials to Supreme Court decisions.


And it's good for celebrity chatter. When pop singer Michael Jackson died on June 25, 2009, Twitter servers crashed after users were updating their status to include the words "Michael Jackson" at a rate of 100,000 tweets per hour.


To help build the company, Twitter's managers raised $57 million in venture-capital funding. It has since raised an $500 million. 

Tags: FBGOOGIPO
4Comments
Sep 13, 2013 10:20AM
avatar

Buy all the shares you can it`s going to be a moonshot.This IPO will make thousands of regular

people millionaires,if they`re smart enough to invest.

Sep 13, 2013 6:37AM
avatar
A sign of the times... the tool of colluding alumni who enforce a jobs blockade and exploitation device for phony celebrity psychopaths, as well as Kool Aid Presidents-- is an IPO? It makes 100% of it's income off annoying ads and produces no product. The only thing worse that a Twitter IPO is Goldman Sachs replacing a REAL business as a Dow Industrial component. Oh wait... that happened this week too! We're losing ground quickly...
Sep 13, 2013 9:37AM
avatar
V_L is exactly right, what real businesses are being created. All these digital Reality Shows and digital Dollars. Twitter has already used it's digital dollars to make a $350Million dollar assets purchase. They have to use digital dollars since in spite of their millions in capital funding, they don't make a annual profit.

Engineers are having to look at 40 year old Saturn Rocket engines just to figure out how to get back into space again the right way. I mean what REAL things are we actually seeing from our highly touted Educational System. All the Hype about Mobile devices and folks blasting about other folks lives. And some wonder why Society is falling apart.

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