Twitter announced its plan to go public late yesterday afternoon, but shared little else about its finances or strategy with would-be investors. The long-anticipated move comes amid a flurry of activity for the company and just days after its largest acquisition to date.
The complete absence of any details surrounding the initial public offering is a surprise, and awkward for a company that’s been credited with breaking open closed societies by propelling the free flow of ideas and thought. But Twitter has also avoided the early scrutiny that dampened the IPO prospects of other startups like Facebook and Groupon. A controversial provision in the JOBS Act passed by Congress last year allows Twitter to keep everything and everyone in the dark until three weeks before the company rings that opening bell on Wall Street.
“We’ve confidentially submitted an S-1 to the SEC for a planned IPO,” the company posted in a tweet. “This tweet does not constitute an offer of any securities for sale.”
By taking advantage of the JOBS Act, Twitter also indicated that its annual revenue is less than $1 billion because anything above that amount would require it to operate outside the newly secret IPO process. In fact, Twitter wasn’t even required to publicly acknowledge the S-1 filing.
“Confidential S-1s? But what could be wrong with releasing 100s of pages of new financial and strategic company info to the Internet while gagged?” former Groupon CEO Andrew Mason tweets a few hours after the announcement. One can only imagine how things might have turned out differently for Mason and Groupon’s IPO if the JOBS Act was in place at the time.
Twitter’s former VP of communications, Sean Garrett applauded the company for what appears to be a methodical march toward the IPO. “Who knows how the IPO will do, but the way that Twitter has created a drumbeat leading to this moment has been masterful,” he writes on Twitter.
Twitter currently has more than 200 million active users and has raised more than $1 billion in venture funding since June 2007. Some analysts have suggested the company is worth as much as $16 billion, but that won’t come to fruition until the company announces its initial pricing and provides details on its business for the first time.
“After seeing Facebook’s stock finally regain its footing a year after going public, we can only imagine Twitter has learned a thing or two from Facebook and will be prepared for potential investor and user blowback,” notes Leila Thabet, managing director of We Are Social’s business in the United States.
“Twitter has made several pushes this year to bulk up their advertising platform, and with recent RTB acquisitions like MoPub, it looks like we haven’t seen the last of the changes in store,” Thabet adds. “Whether Twitter becomes a viable ad platform truly depends on how many brands are able to take advantage of the platform’s real-time nature and deliver ad content that users will find relevant, entertaining, or insightful.”