Twitter takes first step towards stock market flotation

Twitter has fired the starting gun on the internet's most anticipated initial public offering since Facebook by filing its preparatory documents to the Securities and Exchanges Commission.

“We’ve confidentially submitted an S1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale,” Twitter said from its official feed.

A second tweet said simply: "Now back to work", showing a picture of Twitter's San Francisco offices.

By submitting a filing under the Jumpstart Our Business Startups, or Jobs Act, Twitter will be taking advantage of a US law signed last year by president Obama intended to induce more companies to tap the country’s public markets.

Specifically, companies with less than $1 billion in annual revenues can keep their securities filings confidential until three weeks before the launch of an investor roadshow.

Twitter was valued at around $10 billion in private transactions earlier this year, including a stock sale to fund manager BlackRock.

The move comes after Facebook’s stock hit a new all-time high earlier this week, finally breaking above the $45 mark that it hit on its stock-market debut in May 2012.

Twitter may be seeking to avoid the hype that led to Facebook pricing its offering at 107 times trailing 12-month earnings, more expensive than 99 percent of all companies in the Standard and Poor’s 500 Index at the time. Facebook lost half its value following the $16 billion IPO. “

Twitter will do everything they can to avoid anything that looks like the Facebook IPO, both on the expectations front and the execution front,” David Pakman, a New York-based partner at Venrock Inc., an early-stage venture-capital firm, said by phone. “By the confidential filing, it will hopefully be able to keep expectations down a bit, and hopefully use a different pricing strategy than Facebook.” Goldman Sachs Group Inc. will be the lead underwriter for the IPO, according to people with knowledge of the matter, who asked not to be identified because the information isn’t public. The investment bank’s top rival, Morgan Stanley, led Facebook’s public debut.

– Copyright The Financial Times Limited 2013