|Twitter Announces IPO Filing Via Tweet|
|By SUSANNA KIM (@skimm) and JOANNA STERN (@joannastern)||Sep 12, 2013, 5:19 PM|
Social media site Twitter has filed an application with the Securities and Exchange Commission for an initial public offering, or IPO.
True to its business, Twitter tweeted on Thursday, "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."
The company filed a confidential S-1 filing, as permitted with the Jumpstart Our Business Startups, or JOBS, Act. The S-1 filing, revealing details about Twitter's business such as its user base, will become public no later than 21 days before the firm's road show with potential investors.
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The Jobs Act, signed into law in April 2012, permits companies with less than $1 billion in annual revenue to file a confidential S-1.
The media has already started to compare Twitter's potential IPO to that of Facebook, which went public on May 18, 2012.
Rick Summer, internet and technology analyst with Morningstar said, "Market sentiment is obviously pretty favorable towards market-leading social Internet companies, with the recovery in Facebook's stock (which was warranted, in our view) leading the charge."
However, the devil is in the details, said Summer, who expects to learn "a great deal" once the S-1 filing is made public. He is interested in insight into the company's customer base and revenue mix, based on types of advertising.
"Ultimately, we would expect the company's financials to demonstrate these advantages," Summer said. "Still, we would advise investors to be very sensitive to valuation. Clearly, waiting [until] after Facebook's IPO and investing at a more reasonable valuation would have been the preferred way to invest in Facebook."
After early stock performance that disappointed many investors, shares of Facebook closed at $44.75 on Thursday. Facebook's offer price was $38 a share and its valuation was about $100 billion. Early estimates of Twitter's valuation range from $10 to $20 billion.
Facebook CEO Mark Zuckerberg offered Twitter some advice on its offering at the Techcrunch Disrupt conference held in San Fransisco this week.
"Having gone through what I think most people would characterize as an extremely turbulent first year as a public company, I can tell you it isn't that bad," Zuckerberg said. "I was worried people would leave the company and people would get really demoralized when the stock price goes down, but people are really focused on the mission and really believe in the products they are working on. I think it has made our company a lot stronger."
So far this year, there have been 293 IPO filings with the SEC, up 61 percent, excluding confidential S-1 filings. In the same nine-month period last year, there were 182 filings, according to Thomson Reuters.