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After months of speculation, Twitter has finally set its initial public offering in motion.

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A few minutes ago, Twitter sent out a tweet on its own Twitter account saying that it had “confidentially submitted an S-1 to the SEC for a planned IPO.”

A Twitter spokesperson confirmed the news to CNET but didn’t elaborate.


By saying that the filing was “confidentially” submitted to the SEC, Twitter was taking advantage of a provision under the 2012 JOBS Act which allows companies to file a registration with the SEC and then get feedback from the SEC on the filing. This is a JOBS Act benefit allowed companies with annual revenue of under $1 billion in their most recent fiscal year. “Only after that give and take,” said Jay Ritter, a professor of finance at the University of Florida, “if they still want to go public…is it required to file a public registration that the world can see.”

The seven-year-old Twitter, which to date has raised $1.16 billion in venture capital, and which employs more than 2,000 people, currently has more than 200 million monthly active users. It was recently forecasted by eMarketer to come close to $1 billion in advertising revenue in 2014. EMarketer also anticipated that Twitter will net 1.85 percent — or roughly $308 million — of the $16.65 billion worldwide mobile ad market this year.

By going through the confidential process, Ritter said, Twitter was indicating that it is highly confident it will go ahead with its IPO. That’s because otherwise, it risks the embarrassment of having the IPO fall apart, something that would not be the case if it hadn’t said anything. However, it’s also likely that Twitter was trying to get out in front of speculation that it was preparing its IPO.

According to Ritter, the timing of Twitter’s announcement today suggests that it is roughly three months from going public. About a month from now, he added, Twitter will likely file its formal registration statement.

Twitter’s announcement comes at a time when the climate for Internet IPOs has markedly improved. In the first months after Facebook’s initially disastrous IPO, most thought that Twitter’s hopes for going public had sunk with Facebook’s stock. But just yesterday, Facebook’s stock, on the strength of dramatically improved mobile revenues, hit its all-time high. Indeed, in an interview at TechCrunch Disrupt yesterday, Facebook CEO said Twitter should not be afraid of going public.

Twitter’s IPO fortunes have generally been tied to that of Facebook because of the similarities of the two companies. In a recent report, Pew found that as of May 2013, 72 percent of online U.S. adults use social networking sites, up from 67 percent in late 2012. Clearly, then, the market for companies like Facebook and Twitter is growing.

Twitter, too, has been preparing for its IPO for quite some time, acquiring companies and making feature decisions geared towards maximizing revenues


Henry Sapiecha

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