Investors Aren’t the Only Ones Interested in the Twitter IPO
Any hopes Twitter had for a quiet initial public offering have pretty much gone out the window at this point. The social media company’s IPO was a hot topic of conversation even before Twitter announced it had confidentially filed an S-1 with the Securities and Exchange Commission last week. Now that the ball is rolling, Twitter is in the spotlight, and it isn’t likely to leave anytime soon.
What has Twitter on everybody’s radar is not just its popularity as a social media platform — the company recently claimed 200 million users — but its increasingly successful monetization. EMarketer predicts the service will generate $582.8 million in global ad revenue in 2013, nearly $1 billion in 2014, and $1.3 billion in 2015.
This is up from $139.5 million in 2011 and $288.3 million in 2012. Twitter is currently valued at approximately $10 billion. The research firm also calculates that in 2013, Twitter will derive as much as 55 percent of its ad revenue from mobile, outshining companies like Facebook (NASDAQ:FB) and Google (NASDAQ:GOOG) in that arena.
But profit-hungry investors aren’t the only ones looking at Twitter. With an IPO looming, U.S. stock exchanges also also trying to get in on the action.
At the end of the day, Twitter will only call one exchange home, and in all likelihood that exchange will either be the New York Stock Exchange, operated by NYSE Euronext (NYSE:NYX) or the Nasdaq, operated by the Nasdaq OMX Group (NASDAQ:NDAQ). Each of the exchanges has something to gain from grabbing the high-profile listing for themselves.
After botching Facebook’s IPO in 2012 and experiencing some minor technical errors over the past few years, the Nasdaq has a reputation to mend. Both individual and institutional investors have raised concerns with the exchange because of these issues, and the exchange has had to pay $10 million to the SEC to settle allegations that it violated securities laws in relation to the Facebook IPO. Nasdaq didn’t have to admit or deny guilt, but the public generally faults the exchange for the fiasco.
The NYSE arguably has less at stake. The exchange has not been plagued with the same sort of errors that the Nasdaq has, but landing the Twitter listing could go a long way in convincing other technology companies to join the exchange when they file their IPOs. The NYSE does list LinkedIn (NYSE:LNKD) and Pandora (NYSE:P), but the Nasdaq is generally the exchange favored by technology companies.
Here’s Scott Culter, head of listings at the NYSE, speaking with Bloomberg on listings: