Twitter finally reveals plan to go public
Twitter revealed tonight that it intends to go public – with the news released via a tweet from its official account.
The tweet reads: “We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.”
The company, which has a sizeable operation in Dublin, is valued at about $10bn (€7.5bn).
The Initial Public Offering (IPO) is intended to give it a cash pile to better compete with rivals such as Google and Facebook.
The firm followed up its dramatic tweet with a picture of the Twitter offices and a message reading: "Now, back to work."
Twitter was founded in 2006 and is based in San Francisco. There are some 200 million users worldwide and 400m tweets are sent a day.
We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.— Twitter (@twitter) September 12, 2013
It is one of the largest and most powerful social media platforms in the world and disseminates a huge volume of information throughout the world.
As it has grown, it has been used as a tool by celebrities, journalists and millions around the globe.
The announcement to float on the stock market has been long-expected for a while.
The company, which recently installed a "report" button following a number of complaints of abuse on the site, has been using adverts to boost income ahead of the announcement.
The move comes after Facebook floated on the US stock market in May 2012 for $104bn and, despite seeing an initial slump in shares, has since had a resurgence.
The impending IPO of the microblogging phenomenon ignited a competition among Wall Street's biggest names for the prestige of managing its coming-out party. Goldman Sachs is an underwriter, a source familiar with the matter said .
Twitter's IPO, though much smaller than Facebook's, could still generate tens of millions of dollars in fees from the underwriting mandate itself. Assuming the company sells around 10pc of its shares, or $1 billion, underwriters could stand to divide a fee pool of $40 million to $50 million, assuming an overall fee cut of 4pc to 5pc, according to Freeman & Co.
But benefits for banks that underwrite the deal would likely be far-reaching.
"Some companies will say, 'We liked the way you handled Twitter, and we want to come to you first when we do our IPO,'" said David Menlow, president of IPOFinancial.com.
"It's not only bragging rights," Menlow said. "It's getting through the front door, which will line up banks for other transactions done after that, like debt financings and M&A."
Twitter is on track to post $583 million in revenue in 2013, according to advertising consultancy eMarketer.
Under the 2012 JOBS Act that eased securities regulations, companies may file to go public without disclosing certain financial records. But companies that choose to file confidentially must meet certain criteria, including annual revenue of less than $1 billion.
Max Wolff of Greencrest Capital estimated that Twitter would reach break-even this year, and that it is on track for 40pc annual growth at a $1 billion annual revenue run rate.
"It's completely conquered mobile. It has an enormous social network. It's becoming a key utility as a second screen to TV and it's literally the first draft of history," Wolff said. "Normally a company like Twitter would have been public for some time."