Will Twitter Draw the Curtain on Its Financials This Week?
Twitter continues to march toward its highly anticipated initial public offering. Sources tell Quartz that the social media platform could make its S-1 filing public as early as this week, a move that could prime the investment pump with critical data about the company’s business model and financial condition.
Twitter announced via Tweet that it had confidentially filed the S-1 document on September 12, but insiders have revealed that the company actually submitted the paperwork to the Securities and Exchange Commission in July. Twitter was able to submit its filing privately thanks to the Jump Start Our Business Startups Act (or, JOBS Act), which was passed in 2012 in an attempt to encourage small businesses to seek public funding through the markets.
Although somewhat controversial, the JOBS act has allowed companies like Twitter to test the waters without necessarily disclosing any sensitive information to the public. A confidential filing allows Twitter to court large investors and grapple with the issues of demand for equity and valuation in private before pulling back the curtain, which could help reduce volatility when shares ultimately go public.
The big specter that haunts many conversations about Twitter’s IPO is the mess that was the Facebook (NASDAQ:FB) IPO. The Facebook IPO has earned a place in history as an example of what an IPO should not look like. The IPO — launched on the Nasdaq, the exchange operated by the Nasdaq OMX Group (NASDAQ:NDAQ) — was plagued with technical errors. Combined with a huge amount of hype and a valuation that was, at the time, perhaps too generous, it was a recipe for disaster.
Facebook launched its IPO on May 18 with shares priced at $38 a pop and some combination of deflating hype, technical malfunction, and market voodoo drove shares down more than 32 percent by June 5. By September, the stock had lost more than 50 percent of its value. The Facebook IPO could be one reason that Twitter has reportedly chosen to list on the New York Stock Exchange, which is operated by NYSE Euronext (NYSE:NYX). NSYE Euronext has worked hard recently to gain more major tech listings, and Twitter could be a trophy addition to its growing lineup.
Twitter is expected to sell between 50 million and 55 million shares priced between $28 and $30, raising between $1.4 billion and $1.65 billion. Such a sale would value the company somewhere between $15 and $16 billion, higher than the $10 billion estimate that was tossed around a few months ago.
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