Twitter might fall under one of the most used service on the Internet, and the company filed a secret IPO recently. The announcement was made with just a single tweet from the company, making people realize how important messages can be sent to the world with just 140 characters.
Apart from all the closed dealings that Twitter will make to push the company forward with the IPO, some are not clear about this secret IPO that Twitter is doing. Here, we try to answer some important questions that many might have in mind about the Twitter’s IPO.
What’s the Secret IPO (S-1) about?
A S-1 filing can be done if a company wants to go public, but the company does not generate revenue more than $1b annually. This comes under the Securities and Exchange Commission rule, which is also called as The Jumpstart Our Business Startups (JOBS) Act in the US.
Twitter, which has been struggling to find a stable way to monetize their platform, surely did not generate revenue more than $1b, and that’s the reason the company is taking advantage of the JOBS Act to go public. Currently, Twitter’s revenue is expected to be between $500 – $600 million annually. But if the research firm’s data are to be believed, the company might hit a $1b in revenue by next year. And this is definitely going to help them if they go public.
Why is Twitter filing its IPO now?
The data from different sources reveal that the Investors are interested in investing in Internet based companies. And one good and huge example that we saw earlier this year is Facebook, which filed an IPO and went public.
According to Renaissance Capital, the increase in companies filing an IPO has gone up by 44% when compared to last year. Talking about this, Analyst, Rob Enderle says:
There was no point going out until folks could see an upside for a social media property,
We’re sure Twitter would have analyzed a lot of criteria before filing the IPO. And this, being the right time for any Internet media company to go public, Twitter made the move.
But going IPO might not be the thing here. The company’s performance in the Wall Street after going public is going to be the factor that many would look for. According to Brian Blau, an analyst from Gartner, reveales that the company going public is going to help them have a sustainable future. Which we think is true.
If we are to go by the number of Internet based companies performing well in the Wall Street, there might be a slip in the shares. Facebook has literally been struggling to make an impact in the Wall Street ever since it went public. Yet another example of Internet based companys’ shares going down is Groupon. Who’s Founder and CEO was kicked out after their shares went down the first day of trading.
Twitter might be taking a calculated risk by going public.
When will Twitter start trading at the Wall Street?
Twitter might start trading pretty soon. The company might make some huge announcements about their IPO next month, after which they might pitch their ideas to the investors after three weeks.
The value of Twitter’s share is roughly between $26-$28 per share, considering the value of the company currently. Twitter is currently valued between $9-$10 million.
Image Source: Huffington Post