Twitter files for IPO. Stick your money under a mattress and head for the hills. The zoo is coming to town.
Microblogging site Twitter has filed for an IPO in the US. It made the announcement, not surprisingly on its own site, courtesy of a tweet, saying it had confidentially submitted the S-1 documentation.
For those of you considering trying to get in on the joke, we have two syllables for you: Face…book.
Twitter is using the provisions of the JOBS Act to avoid public scrutiny of its filing, however this approach also reveals that its revenues are less than $1 billion, the threshold test for a confidential filing.
Current estimates put Twitter’s market value at about $11 billion although a report in Gigaom after the news broke suggested that hedge funds had been trying to buy into the company at levels that would value Twitter at closer to $14 billion. Still that’s a long way shy of the $100 billion valuation Facebook shot for with its IPO before crashing in the subsequent rout.
As to what Twitter’s actual revenues might be, take your pick. Privco estimates it will earn $500 million this year. eMarketer puts the figure closer to $600 million and both believe the company is growing at over 100 per cent per annum according to Statista.
You will find more statistics at Statista
Facebook’s stock eventually recovered after its strong Q2 result this year but only after a year of pain which had some people calling for CEO Mark Zuckerberg to be sacked. Eventually its share price recovery was powered by its mobile revenue surge but a lot of people lost of lot of money along the way.
And there are worse horror stories, as any Groupon investor will tell you.
Still that hasn’t stopped the usually sensible PandoDaily reaching for the Cool Aid this afternoon.
Writer Kevin Kelliher suggests,”If the IPO market for social media companies were a three-act play, Act One would be LinkedIn, Facebook would represent the distressing second act and the Twitter IPO – announced by the company today on its own service – would be Act Three, an act that looks to be set up for a very happy ending.”
Kelliher writes that unless the black swans put in an appearance in the coming months, “Twitter will be sailing into public waters under conditions far more felicitous than Facebook did in May 2012.”
“Twitter,” he says, “is likely to debut with smaller revenue and far fewer global users, it’s poised to be the anti-Facebook of IPOs.”
At Which-50 we think you should reserve judgment on that call. Investment banking is a club and all the member are rapacious carnivores who treat retail investors like yesterday’s carrion - or in the polite language of Goldman Sachs “Muppets.”
Just remember that the types people who will drive Twitter’s IPO are the same ones who withheld a material short fall in Facebook’s revenue from the market prior to its IPO and who bet against the stock even as they were recommending to their clients that they buy it.
Techcrunch’s Alex Wilhelm was probably closer to the truth with this observation. “Twitter’s public offering has been a very long time in coming, and contains inside of it oodles of institutional pressure: With hundreds of millions of invested capital under its belt, Twitter has a number of investors that want their money back. It has been well-managed, sure, but cash has a certain feel to it. The IPO will be a zoo.”
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