• Monday, Jan 17, 2022
  • Last Update : 03:32 am

Twitter takes first step toward going public

  • Published at 07:14 pm September 14th, 2013
Twitter takes first step toward going public

Twitter Inc has filed for an initial public offering with US regulators, the company said on Thursday, taking the first step toward what would be Silicon Valley’s most anticipated debut since Facebook Inc’s last year.

The impending IPO of the microblogging phenomenon ignited a competition among Wall Street’s biggest names for the prestige of managing its coming-out party. Goldman Sachs is lead underwriter, a source familiar with the matter said on Thursday, which is a major coup for the Wall Street bank.

Twitter filed for an IPO confidentially under a 2012 law intended to help emerging corporations with less than $1bn in revenue go public. Seven-year old Twitter, which allows users to send out streams of 140-character messages, has become an indispensable tool to governments, corporations and celebrities seeking to communicate with their audience, and for individuals seeking both news and entertainment.

Chief Executive Dick Costolo has for years waved off suggestions it 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.

Twitter, which has been valued by private investors at more than $10bn, should break even this year and is on track for 40% annual growth at a $1bn annual revenue run rate, Max Wolff of Greencrest Capital estimated.

“It’s completely conquered mobile. 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,” Wolff said.

“Normally a company like Twitter would have been public for some time,” he said.

Since Jack Dorsey, Twitter’s inventor, dispatched the first tweet from a downtown San Francisco office in March 2006, the service has grown into a worldwide phenomenon with more than 200 million regular users contributing more than 400 million posts a day.

The company makes money by inserting paid, targeted ads that resemble ordinary, user-generated content. Twitter’s success with its advertising model created a new paradigm for mobile advertising and prompted Facebook last year to adopt a similar ad product, called Sponsored Stories.

But Twitter was one of the first to prove that in-stream ads could be a viable way to make money in the mobile era.

“There was a lot of concern about whether they’d ever be able to insert advertising into their site,” said Forrester analyst Nate Elliott. “They’ve shown it can be effective. They offer in many ways better measurement for marketers than larger companies like Facebook.”

Twitter’s lead law firm will be Wilson Sonsini Goodrich & Rosati, the firm’s chairman Larry Sonsini told Reuters in an email. Sonsini’s firm is famous in Silicon Valley for taking public marquee names such as Apple, Netscape and Google.

Jostling For Roles

Wall Street continues to jostle for a slice of its impending debut, sources told Reuters on Thursday.

Technology bankers at major banks from JPMorgan and Credit Suisse Group AG to Morgan Stanley are still vying for roles in the IPO. Several are in informal conversations with the microblogging network’s management, said two sources familiar with the matter who declined to be named because it is not public.

A similar race is on around China’s Alibaba, which is expected to raise more than $15 billion this year. Bank chief executives such as JPMorgan’s Jamie Dimon and Citigroup Inc’s Michael Corbat have made it a point to meet Alibaba founder Jack Ma.

Twitter’s debut, though much smaller than Facebook’s, could generate tens of millions of dollars in fees from the underwriting mandate itself. 

Assuming it sells around 10% of its shares, or $1bn, underwriters could stand to divide a fee pool of $40m to $50m, assuming an overall fee cut of 4% to 5%, according to Freeman & Co.

But the benefits for banks that underwrite the deal would likely be far-reaching.

“Some companies will say, ‘We liked the way you handled Twitter, and we want to come to you first when we do our IPO,’” said David Menlow, president of IPOFinancial.com. 

50
Facebook 50
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail