|Twitter posts public float idea, analyst says company must show viability of business to marketers
Twitter announced, in a tweet, that it has submitted papers for a stock offering.
The San Francisco company did not provide details on the offering dates or pricing.
“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 tweeted.
Moments later, the company tweeted a picture of its staffers, and said: “Now, back to work.''
Twitter's market value has been estimated around US$10 billion based on early venture capital investments, but the initial public offering is likely to bring a higher amount.
“We expect Twitter to price IPO conservatively at 20-30x revenue, or US$15 billion, with about US$500 million in revenue,'' said a tweet from the private company research firm PrivCo.
Twitter has become one of the fastest-growing and most influential social media services, used by celebrities, journalists, politicians and others.
According to the company it had “well over 200 million'' active users.
Twitter said this week it was moving deeper into mobile advertising with the purchase of MoPub, a startup focusing on mobile ad exchanges.
The acquisition was announced late Monday. It was estimated to be worth some US$350 million, according to the technology news site TechCrunch.
The social network is expected to earn US$582.8 million globally in ad revenue this year and nearly US$1 billion next year, according to industry tracker eMarketer.
The company is taking advantage of a rule adopted last year by the Securities and Exchange Commission, which allows “emerging growth'' companies with revenues of less than a billion to keep financial details confidential until they get closer to the IPO.
Under those rules, Twitter can keep its financials private until 21 days before its presentation to investors.
But Trip Chowdhry, analyst at Global Equities Research, said Twitter is undermining confidence by keeping its finances private.
“The idea of doing a confidential IPO undermines the credibility of the Twitter IPO,'' he told AFP.
“If they are not transparent, it is that they have something to hide; we know nothing of how their company has been going for the last two years.''
“Twitter has firmly established itself as a social tool that people love to use and that the press loves to reference – and more than 60 percent of US marketers are now on Twitter as well,'' said Nate Elliott, analyst at Forrester Research.
``And Twitter works hard to serve those marketers: the company learned how to sell sponsored tweets without upsetting users, when critics weren't sure it was possible, and it offers more useful marketing measurement tools than bigger competitors like Facebook.''
But Elliott said Twitter needs to do more to demonstrate it is a viable business.
“Marketers aren't yet fully satisfied with the results they're achieving on Twitter, and the company still has to improve its ad targeting and find additional ad formats to sell.’’
The company was started by Jack Dorsey who proposed the idea for Twitter while working with Biz Stone and Evan Williams at podcasting company Odeo. Dorsey later stepped aside to run another startup, Square.