In the most anticipated IT initial public offering event since Facebook's in May 2012, Twitter filed a confidential version of S-1 documentation Sept. 12 for an IPO on a date to be named later.
The confidential filing is a relatively new provision enabled by the JOBS (Jumpstart Our Business Startups) Act of 2012. It is a draft registration statement, a precursor to the formal IPO S-1 filing. Under the JOBS Act, companies with less than $1 billion in revenue are allowed to file secretly with the U.S. Securities and Exchange Commission (SEC) before they release their plans.
Twitter, which claims to have more than 200 million regular users and handles an estimated 200 million to 250 million tweets per day, becomes by far the highest-profile company to take advantage of these new confidentiality provisions.
The Twitter S-1 will become public record—if Twitter indeed chooses to go through with the filing—after all stipulations from the SEC are satisfied and if the company deems investment prospects are strong enough.
Goldman Sachs will be the lead underwriter for the IPO when it happens. Securities analyst Michael Pachter of Wedbush Securities told Bloomberg News that he expects to see a formal S-1 filed "right around Halloween, and I think you'll see an IPO right around Thanksgiving (which is on Nov. 28)."
"I do not think this company is anywhere as complicated as Groupon," Pachter said. The Chicago-based Groupon endured a well-documented IPO wracked by financial miscalculations in November 2011 and eventually lost much of its original $700 million stock value.
"The accounting [for Twitter] is just not that hard for essentially advertising revenue. They literally only have three products, so it's pretty easy to account for. They're trying to build buzz, they're striking while the iron is hot," Pachter said.
Pachter said his firm has evaluated Twitter's current worth to be "between $15 billion and $16 billion, and that's up from $9 billion to $10 billion a year ago."
IDC tech analyst Crawford del Prete, adding perspective by comparing Facebook's social network with that of Twitter, said, "Facebook is trying to create an index of people in the world; what Twitter is trying to do is create a new medium for people to communicate in real time—across multiple dimensions.
"This company can continue to see significant growth in the number of users that they have because they are transforming the way we communicate," del Prete said.
The San Francisco-based social network, founded in 2006 by Jack Dorsey, has been ramping up its advertising products and working to boost ad revenue for more than two years in preparation for its IPO.