September 30, 2013
Will Twitter Announce Their IPO This Week?
Michael Harper for redOrbit.com - Your Universe Online
Twitter announced earlier this month that they'd taken the first steps to file their initial public offering (IPO) with US regulators. According to the website Quartz, Twitter's filing is now ready, and they plan to make it public knowledge this week.
According to their sources, Quartz says Twitter hopes to begin publicly trading shares of their company before Thanksgiving. The seven year old microblogging company is expected to be worth some $15 million and could choose the New York Stock Exchange over NASDAQ as their preferred trading platform.
Though Twitter just announced that they’d taken the first steps towards a public filing, they’ve been moving forward secretly ever since July. Insider sources claim Twitter will have to move quickly if they want to meet their self-imposed Thanksgiving deadline, however, leaving several hurdles which must be cleared first. The most notable of these obstacles could be a pending government shutdown.
Under American law, a company can propose a launch day and proposed starting price 21 days after they make a public filing. Though Twitter publicly announced their intentions in a September 12 tweet, sources say the company actually submitted an S-1 form to the US Securities and Exchange Commission (SEC) in July. The company allegedly decided to publicly disclose this information in a tweet to get ahead of the story and avoid any press leaks.
In the past, these S-1 forms were both filed and reviewed publicly. Once a company provides all the information required in these forms, government regulators will publicly issue feedback on their financial performance. A new law called the JOBS Act allows companies that earn less than $1 billion in annual revenue to file all this paper work in private, however.
Twitter allegedly filed their paperwork under this act in July and began receiving private feedback from the SEC at this time. If and when Twitter takes their decision public this week, these documents will become available to anyone looking to take early stock in Twitter.
Once public, these documents will provide some clear answers to many questions, such as how much money Twitter intends to raise for their IPO, how much each share might cost, and if they have, in fact, chosen to go with the New York Stock Exchange over NASDAQ. According to Quartz, Twitter’s expected $15 or $16 million IPO could break down to $28 to $30 per share, but these numbers are expected to change as the actual launch date draws nearer. These documents will also reveal which bank Twitter has decided to work with. Insiders say Goldman Sachs, JP Morgan Chase and Morgan Stanley are all likely contenders.
Those looking to invest will be looking at specific portions of the S-1 filing when it becomes available, including the Selected Consolidated Financial Data section. Here Twitter will publicly disclose how much revenue they bring in each year, how much they spend, and how much profit they earn. Under the previous law Twitter would have to disclose this information going back five years when the company was still quite new and not performing well at all. The new JOBS Act, however, let’s qualifying companies disclose only their top two performing years, though they could disclose more if they choose.