Friday, 13 September 2013

Twitter tweets about Confidential IPO

Twitter in its most recent tweet mentioned that ‘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’.

Twitter, which has a user base of over 200 million, is undoubtedly the most awaited consumer Internet IPO. The hype around Twitter IPO will be in full swing since Facebook went public. While Twitter has many lessons to learn from Facebook’s IPO, as $FB stock price fell soon after its public debut, however Facebook stock has crossed its IPO price recently.

What does this Confidential IPO indicate?

According to JOBS Act which was passed last year, under established SEC rules states that companies that are termed as ‘emerging growth companies’ can be allowed to file their S-1’s confidentially provided that their annual revenue is less than $1 billion.

Yes, Twitter’s revenue is quite less than a billion dollars.

Twitter does not intend to disclose its details as the provision also states that Companies do not have to make their documents public until 21 days before the company goes on the ‘road show’ to pitch the company to big investors on Wall Street for the IPO. As per estimates, under present situation Twitter can have a valuation of between $11 billion to $15 billion, which is subject to change.

PrivCo which gathers information on private companies, its Chief Executive, Sam Hamadeh, has predicted, ‘Unlike Facebook, which waited too long to IPO, Twitter will IPO at just the right inflection point, while revenue grows in triple digits’.

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