Twitter finally has decided to go public, but it is taking a route that will keep most of the details about its business private for a while longer.
On Thursday, Twitter said on its Twitter account that it has “confidentially submitted an S-1 to the SEC for a planned IPO.” A subsequent tweet said simply: “Now, back to work.”
Twitter’s initial public offering has been long expected. The company has been ramping up its advertising products and working to boost ad revenue in preparation. But it is still tiny compared with Facebook, which saw its hotly anticipated IPO implode last year amid worries about its ability to grow mobile ad revenue.
Most of Twitter’s revenue comes from advertising. The research company eMarketer estimates that Twitter will generate $582.8 million in worldwide ad revenue this year, up from $288.3 million in 2012. By comparison, Facebook had ad revenue of $1.6 billion in the April-June quarter of this year.
Twitter’s moneymaking potential has minted the company with an estimated stock-market value of $10 billion, based on the appraisals of venture capitalists and other early investors who have been helping to fund the business so far.
The law that allowed Twitter to file its initial IPO documents confidentially is called the Jumpstart Our Business Startups Act. Barack Obama signed the law in 2012. It is designed to make it easier for small businesses and startups to grow and create jobs.
The law includes a provision that allows a company with revenue below $1bn to file its registration statement for an initial public offering of stock with the Securities and Exchange Commission confidentially. This allows the paperwork to remain private until 21 days before the company starts marketing the deal to investors.
The Wedbush Securities analyst Michael Pachter believes Twitter’s decision to tweet about the confidential filing signals the company’s intention to complete the IPO fairly quickly. “The market is hot and the end of the year is usually is a good time to go public,” Mr Pachter said.
Twitter was founded by Jack Dorsey, Biz Stone and Evan Williams in 2006 when they worked at a podcasting service called Odeo that never gained traction. Mr Dorsey went on to found Square, a mobile payments company, and serves as Twitter’s chairman. Mr Williams, who previously sold a blogging service to Google, stepped down as Twitter’s CEO in 2010 and is now working on a publishing platform called Medium. Mr Stone left Twitter in 2011. His latest startup, announced in May, is called Jelly Industries.
* Associated Press