Social media giant Twitter is very much mainstream in most people’s lives today and has come to chronicle everything from world events to personal opinions. On Thursday this week it announced that it intends to make its stock market debut. The filing was revealed in a tweet on the company’s official account and has set into motion one of the most anticipated initial public offerings in technology history.
It has also been one of the most bashfully sidestepped topics by the company’s executives, as even recently, Twitter CEO Dick Costolo spoke at the AllThingsD conference back in July where he compared the constant questions about an IPO to sports: he portrayed himself as a football player trying to catch a pass, “while people are yelling at him from the sidelines asking him, ‘What are you doing after the game?”.
It is most likely that Twitter was forced to file for an IPO because, like it’s counterpart Facebook, it had enough private investors that regulations required it. The Jobs Act, passed law in 2012, requires a company in the US to go public if it has more than 2,000 private investors. But, earlier this summer Costolo said he was in objection to “short-term thinking” about revenues. Twitter’s confidential filing indicates that it has under $1bn revenues. Under the rules of the Jobs Act, only companies with under $1bn in value may file in secret whereas bigger companies must to file public documents.
Twitter was seen as setting the IPO into motion last year, when it completed a cluster of acquisitions to centralize its power over the distribution of tweets. The company claims 200 million users sending over 400 million tweets daily, nearly 60% of those through mobile devices like smartphones. Twitter is the last in its field to go public. Other big media companies, including Linkedin and Facebook, already command billions of dollars of value in the public markets. Facebook’s market value is $108bn and Linkedin is worth $32bn in stock. As a public company, Twitter will be under pressure to show innovative ideas to make money. Analysts believed the company could take its cue from Facebook, which eased advertising into the social stream of its users and raised its revenues as a result.
If Twitter manages to find a sustainable business model, some analysts deem the company has a healthier chance in targeting its advertising efforts to businesses rather than charging consumers.
[Image via thenextweb]