Twitter said Thursday that it has filed for an initial public offering with U.S. regulators, taking the first step toward what would be the tech industry’s most anticipated debut since that of Facebook.
The company used its own short messaging service to announce that it has filed documents for an initial public offering of stock.
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 (@twitter) September 12, 2013
But the information filed with the Securities and Exchange Commission is sealed because Twitter is taking advantage of recent federal legislation that allows companies with less than $1 billion in revenue in the prior fiscal year to avoid submitting public IPO documents.
The 7-year-old company posted on its official 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.” It was accompanied by a photo of people working in the company’s San Francisco headquarters.
Following the creation of a new city tax-break, Twitter moved to the mid-Market neighborhood in 2012, setting a motion a wave of other tech firm relocation.
Under the law, Twitter’s financial statements and other information in the IPO filing must become publicly available at least 21 days before company’s executives begin traveling around the country to meet with potential investors. Those presentations will be orchestrated by Twitter CEO Dick Costolo, a former stand-up comedian who will now get an opportunity to take his act to Wall Street.
Costolo has for years waved off suggestions that Twitter intended to go public, saying the company remained flush with cash. Facebook’s mismanaged 2012 debut and subsequent share-price plunge also chilled the consumer-dotcom IPO market. Facebook, however, has clawed its way back to its $38 IPO price in July, and the stock is at a record high after touching $45 this week.
Most of Twitter’s revenue comes from advertising. The company inserts paid, targeted ads that resemble ordinary, user-generated content. The success of its advertising model created a new paradigm for mobile advertising. Twitter was one of the first to prove that in-stream ads could be a viable way to make money in the mobile era.
The company, which has been valued by private investors at more than $10 billion, should break even this year and is on track for 40 percent annual growth at a $1 billion annual revenue run rate, Max Wolff of Greencrest Capital estimated.
“It’s completely conquered mobile,” Wolff said. “It has an enormous social network. It’s becoming a key utility as a second screen to TV and it’s literally the first draft of history.”
The public offering comes at a time of heightened investor interest in the IPO market. There have been 131 IPOs that have priced so far this year, according to IPO tracking firm Renaissance Capital. If the momentum continues, 2013 will have the most IPO pricings since 2007 — a year before the financial crisis.
Wedbush Securities analyst Michael Pachter believes Twitter’s decision to tweet about the confidential filing signals the company’s intention to complete the IPO by Thanksgiving.