Map of twitter’s road show:
Alibaba, partly (24%) owned by Yahoo, is planning to go public in the US instead of in Hong Kong.
Experts are guestimating that this will occur in the first half of 2014:
Such a move would very likely push a U.S. listing by Alibaba into the first or second quarter of next year, as it would take time for the company to clear regulatory hurdles and adjust its accounting to conform to U.S. rules.
It would also put the offering in competition with Twitter’s — if the U.S.-based firm hasn’t executed its IPO by then.
Additionally, going public between Thanksgiving and April 15 tax day is a bad idea:
the time between Thanksgiving and tax day on April 15 has been a graveyard for previous tech IPOs. Zynga’s lackluster offering in December 2011 is a prime example.
Quartz also claims that:
Twitter’s IPO filing is ready, and the company intends to make it public this week, according to someone familiar with the plan.
USA Today – Alibaba’s growth woes a lesson for Twitter IPO? - http://www.usatoday.com/story/tech/columnist/shinal/2013/09/29/alibaba-yahoo-twitter-ipo/2883561/
Quartz - Twitter plans to make its IPO filing public this week - http://qz.com/129205/twitter-plans-to-make-its-ipo-filing-public-this-week/#129205/twitter-plans-to-make-its-ipo-filing-public-this-week/
It seems like most things are still just speculation about the Twitter IPO, such as thestreets.com‘s claim that,
The company may sell between 50 million and 55 million shares in the offering, with pricing between $28 and $30 per share, raising anywhere between $1.4 billion and $1.65 billion in the offering. That would value the company around $15 billion or $16 billion.
…the IPO should happen at the end of the year or early next year… However, given that it was stealth filing, he cautions that the filing could have taken place three months before that without any obligations for the company to reveal the action until now.
The one thing that doesn’t seem to be speculation is that Twitter will list on the NYSE rather than on NASDAQ:
Looking to learn from the past, social media company Twitter will list on the New York Stock Exchange in an IPO estimated to net around $1.5 billion, sources close to the situation have said.
Will this affect whether you buy the stock or not?
Exclusive: Twitter Picks NYSE for $1.5B IPO - http://www.thestreet.com/story/12045151/1/exclusive-twitter-picks-nyse-for-15b-ipo.html)
Ernst and Young has a study about IPOs called
in which they state that:
Successful companies usually begin to act like a public company at least a full year prior to going public.
Do you believe that Twitter has been acting like a public company for at least a year?
( Link to Top 10 IPO readiness challenges: A Measures that matterSM global study executive summary - http://www.ey.com/Publication/vwLUAssets/Top_10_IPO_readiness_challenges_10/$FILE/2_Top%2010%20IPO%20readiness%20challenges%20a%20Measures%20that%20Matter%20study.pdf )
Before twitter goes public, they are looking to get a $1 Billion line of credit according to the New York Post:
Twitter is seeking a credit line — for working capital purposes — of $500 million to as much as $1 billion ahead of its IPO, sources familiar with the situation said.
There are many naysayers claiming that Twitter’s IPO will only put more pressure on them to increase revenues, forcing the media company to place more ads, thereby hurting the quality of their service. This point is lost on me. Once twitter gets the capital influx from
their IPO, they will have every resource available to them to improve the quality and placement of the ads.
If anything, right now ad placement is hurting the service, due to the limited amount of advertisers they have. When I was searching for “#IPO #Twitter” the other day on twitter, I was repeatedly getting ads for a Chase service. While Chase is a financial institution and I was looking up a topic related to finance, this is not an ideal result. Something related to investing or financial news would be more appropriate.
But these are only my musings. The more experience Twitter gets with the ad placement, the more data they will have and the more valid will be their ad placement. Their revenue will just climb as their algorithms improve the ad targeting and as they find new means for advertising. In other words, Twitter’s value will continue improving for quite some time to come and the IPO will only give them the necessary capital boost to grow faster.
What about Facebook, you say. Yes, Facebook failed at their IPO, but as you can see their stock has rebounded (quite quickly, I might add) and will no doubt continue to grow as they add more revenue streams. Twitter will undoubtedly learn from its big brother’s mistakes, which is yet another plus for their revenue potential.
Wikipedia explains the SEC’s S-1 form as:
The S-1 contains the basic business and financial information on an issuer with respect to a specific securities offering. Investors may use the prospectus to consider the merits of an offering and make educated investment decisions.
The full wikipedia article is here:
According to Investopedia:
Form S-1 requires companies to provide information on the planned use of capital proceeds, detail the current business model and competition, as well provide a a brief prospectus of the planned security itself, offering price methodology, and any dilution that will occur to other listed securities.
The full Investopedia description is available here:
In case you’re ready to file, you can see a blank copy of the form here:
And here is Facebook’s completed S-1 form:
This type of IPO is for companies making under a billion dollars annually.
Despite the confidential filing, this does signal that Twitter is making less than $1 billion in annual revenue. That’s generally in line with third party estimates. EMarketer in March estimated Twitter’s revenue at $582 million this year and close to $1 billion in 2014.
See the full Forbes article here:
Mark Zuckerberg at Disrupt 2013 discussing IPO’s…
If you were paying very close attention you might have seen the clues…