Twitter finally revealed its IPO filing publicly on Thursday afternoon, leaving some questions unanswered, but also providing many details about the San Francisco-based social media giant. The company’s upcoming IPO (or initial public offering) is likely to be the most significant new stock offering in the tech industry since Facebook in 2012.
The company would be traded under the ticker name TWTR. The filing indicates they seek to raise $1 billion.
Earlier this month, Twitter announced its filing in a tweet on its own service, appropriately enough. But until today, the details of papers filed with the Securities and Exchange Commission (SEC) were not public. The information released offers insight into a service that has become one of the world’s largest public forums, but has only recently started trying to turn a profit.
The company reported $253 million in revenue during the first six months of 2013, but also reported a $69 million loss over the same period. Though the company continues to operate at a loss, its revenues are going up, and losses appear to be decreasing.
The filing also revealed who already has a stake in the company, and thus stands to make the most money from a Twitter IPO. Co-founders Jack Dorsey and Evan Williams both have high stakes, with Dorsey owning 4.9 percent and Williams at a much larger 12 percent. One of Twitter’s board members, Peter Fenton, has a stake of 6.7 percent. Investment firms such as Union Square Ventures, Spark Capital, and Rizvi Traverse each own around 5 percent.
The release of public information is a required step before companies can begin making “roadshows,” in which they meet to discuss the IPO with potential investors. About three weeks after the documents are made public, these roadshows can begin, and typically last one to two weeks. This means Twitter shares could finally begin public trading in November now that its IPO filing is revealed.
As previously reported, Twitter had filed secretly, as permitted by the new Jumpstart Our Business Startups Act, or JOBS Act, signed into law by President Obama in 2012. The JOBS Act allows companies like Twitter to file a draft IPO prospectus confidentially, so long as they currently have less than $1 billion in annual revenue. Then, the law permits those companies to propose their share price as little as three weeks after revealing their filing.
Quartz, an online news site, broke the story on Sunday that Twitter would make its filing this week. Quartz’s sources also stressed it is still possible that a number of factors could delay the filing. These factors include the continuing shutdown of the US government by Congressional Republicans, which has already caused drops in the stock market and could do even more damage if it continues.
Sources indicate that Twitter used the secret filing as a means of avoiding the frenzied hype that accompanied the Facebook IPO. That social media company’s stock price under-performed initially when trading began in 2012, but it is now trading above its IPO price, a promising sign for Twitter and its would-be investors.
Wall Street is also hoping that upcoming IPO’s this fall—from well-recognized companies like Twitter, Hilton, and Chrysler—will lure back individual investors, many of whom were scared away by Facebook’s early stumbles and other recent economic uncertainties. Though the market is having a strong 2013, private individuals are still considered skittish about riskier plays, especially IPOs.
Originally, the confidential filings allowed for by the JOBS Act were part of a plan to help start-up companies make decisions about selling. By privately considering whether to go public, sell to another company, or simply raise more investment capital, companies could explore their options without revealing financial details.
Twitter, however, has never had any other intention than going for an IPO, and has spent all this time working on its filing. The Street reported that Twitter is planning to be listed on the New York Stock Exchange, unlike Facebook and many other tech companies that have chosen the NASDAQ for their IPOs. The company estimated to come out of its IPO with a value of $15 or $16 billion. Now that Twitter’s IPO filing is finally revealed, it will probably finish its roadshows by Halloween and be on the NYSE by Thanksgiving.
Written By: Jeremy Forbing