Twitter expected to be ‘worth $11bn’
Traders say flotation may be greeted with caution following Facebook debut
A tweet from Twitter Inc. announcing its initial public offering. Photograph: Hyungwon Kang/Reuters.
The social network has filed paperwork for an initial public offering (IPO) and announced the news in a tweet last night. The move follows fervent speculation about when the company would go public and comes more than a year after Mark Zuckerberg’s Facebook enjoyed one of the biggest flotations in the US stock market history. Estimates suggest
Twitter could be worth between $10 billion and $15 billion, with most bets around the $11 billion mark. The micro-blogging site set out its plans last night telling users it had submitted a form to the American market regulator, the US Securities and Exchange Commission (SEC), ahead of a planned IPO.
It made use of a new rule that enables firms with revenues of less than $1 billion to file the documents confidentially. This means details of its finances will be kept under wraps until it begins to draw investors.
“We’ve confidentially submitted an S-1 to the SEC for a planned IPO,” it said, adding: “This tweet does not constitute an offer of any securities for sale.”
The firm followed the tweet with a picture of the Twitter offices and a message reading: “Now, back to work.” Its initial message has already been retweeted more than 12,000 times and the subject was trending on the micro-blogging site this morning.
Twitter’s potential public offering has sparked constant discussion on Wall Street since Facebook floated in May last year for $104 billion. But the company saw an initial slump in shares amid concerns over how it could boost revenue from the growing number of mobile users.
Experts said Twitter would be hoping to avoid the same issue when it makes its anticipated transition to public ownership. No date for this has been given though observers have suggested the site could be listed at the end of the year.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said Twitter would need to be “very clear about how it was going to monetise”. “They are also going to want to avoid the pitfalls that Facebook fell into,” he said.
But he added: “Twitter has had plenty of time to consider how it would avoid the pitfalls. I would hope that, on that basis, when they do come to market, they would be ready.”
Ishaq Siddiqi, market strategist at the financial spread betting firm ETX Capital, warned the market could be a “little more wary” with Twitter after the troubles that followed Facebook’s stock market debut.
“The valuation compared to Facebook, however, is far more attractive with private investors valuing the online social networking service at 10 billion dollars,” he added. “Speculation, however, suggests it could be north of that figure, up to 14 billion dollars.”
Twitter, founded in 2006, has grown to become one of the largest and most powerful social media platforms in the world. The San Francisco-based site is used as a tool by celebrities, journalists and millions around the globe to publish 140-character messages in real-time.
It has 200 million users worldwide who post around 400 million tweets a day. The company is believed to be on track to post $583 million in revenues this year and $1 billion dollars next year.