The world’s third-busiest social media website appears ready to follow in the footsteps of Facebook and LinkedIn, having recently announced its intent to file for an initial public offering.
Twitter made the announcement last week via one of its trademark “tweets,” revealing only that it had filed “confidential[ly]” with the Securities and Exchange Commission. As a company earning less than $1 billion in annual revenues, Twitter qualifies under a 2012 JOBS Act provision whereby “emerging growth companies” are allowed to make their filings in secrecy.
A confidential filing will provide some benefits to the company: in addition to being able to keep its early discussions with regulators behind closed doors, Twitter can also elect to release only two years of financial statements rather than the standard three, and the company does not have to disclose all of the executive compensation details usually required of other companies. The company will still be expected to release necessary financials three weeks before it begins its investor road show.
Meanwhile, Twitter CFO Mike Gupta has been in negotiations with banks involved in the company’s underwriting process. Sources have indicated that Goldman Sachs will be the lead underwriter, but other banks, such as Morgan Stanley, JPMorgan Chase, and Bank of America, could also be involved. Underwriting means big business with large-scale IPOs like Twitter: Facebook’s $16 billion IPO last fall netted its underwriters over $175 million. And with initial valuations of Twitter approaching that same mark—around $15 billion, according to some analysts—the underwriting banks could be in for another large payday.
If the deal goes through, Twitter will be the latest of the social media giants to go public, with its investors hoping the company avoids some of the problems that plagued Facebook’s IPO. Sources close to the situation expect the Twitter IPO to come shortly before the holiday season—perhaps just before Thanksgiving—as the company attempts to capitalize on the fourth quarter’s traditionally high levels of social media activity and advertising.