Friday, 13 September 2013

Twitter plans stock market listing - BBC News

The BBC's Samira Hussain says it is hoped Twitter will "learn some lessons" from Facebook's stock market listing

Twitter has announced it has filed paperwork with US regulators ahead of a planned stock market flotation.

"We've confidentially submitted an S-1 to the SEC for a planned [initial public offering]," the company tweeted on its official feed.

The stock offering is the most hotly anticipated since Facebook listed its shares last year.

Twitter did not say when it plans to make the offering, and gave no further details in its tweet.

Once a company has filed paperwork with US regulators for a planned IPO it enters a so-called "quiet period" when it is not allowed to speak with the press.

According to the Securities and Exchanges Commission's website, a company can file a confidential prospectus for a public share sale if it is classified as an "emerging growth company" with revenue of less than $1bn.

Twitter has been valued by private investors at more than $10bn (£6.3bn), and is on track to post $583 million in revenue in 2013, according to advertising consultancy eMarketer.


Twitter's flotation was long expected but is only likely to increase scrutiny of the company.

In recent months it has faced criticism for not doing enough to tackle rape threats against prominent women; for not having enough security measures to prevent media accounts from being hijacked; and, in parts of the Middle East, leaders have accused it of being a "scourge" and a "threat to national unity" for its role in opposition protests.

The firm will be mindful of the extra scrutiny Facebook endured after its flotation. Twitter users will also be on guard for the idea that pressure from investors could see them made subject to more adverts.

Investors meanwhile may be concerned about churn - the idea that people join and then drop out. Innovation may be the answer to that, with Twitter's new music discovery service and ways of viewing conversations with others being possible solutions.

Mobile first

On Monday, Twitter said it had acquired MoPub, a mobile-focused advertising exchange, for a reported $350m, as part of its continued push to boost advertising.

"Twitter was more or less a mobile-first platform from the start and so the company built its experience to work relatively well across devices," Clark Fredriksen of eMarketer told the BBC.

"Ultimately, they did a good job of monetising their mobile user base."

Some speculate that the timing of the IPO has to do with the company's desire to further grow - as well as with its desire to reward investors, who have poured more than $1bn into the company.

"For one thing it gives its investors a way to get some of the money back that they put into the company at the beginning," said Andrew Frank, social media expert at tech advisors Gartner.

"It gives the employees a similar kind of event to reward them for the success they've had so far.

"It gives Twitter itself extra funds to invest in new projects and innovation. It also gives it the status of having a position on the stock exchange, which of course puts the firm in a different league to a start-up."

Learning from Facebook

"Twitter is one of the last of the major developed social networks to file [for an IPO] - we've already had Facebook and LinkedIn," said Colin Gillis, a New York-based tech specialist at BGC Partners.

Facebook listed on the stock market in May last year. Although it initially created excitement among investors, its share price performed poorly, before recovering this summer.

Mr Gillis said it was impossible to say how great the demand for Twitter shares would be until the company released a valuation.

"There's a few issues [such as] how many revenue streams can be developed beyond just advertising, the impact of more people accessing the service via smartphones," Mr Gillis said.

Analysts say Twitter must continue to innovate under the scrutiny of public ownership.

"One of the things they will have to focus on is making sure that they keep their users very actively engaged," Nate Elliott, an analyst at the tech consultancy Forrester, told the BBC.

"One of the things Facebook has done very successfully over the past year and a half has been to show that not only is the number of users growing, but that those users are becoming more active."

'This tweet is going public?'

Twitter's tweet announcing its filing immediately went viral - it was re-tweeted more than 8,000 times within an hour of its posting.

For many users, it seemed apt that the company would use its own platform to announce the news.

"Naturally Twitter announces its IPO via Twitter. What other way?" one read.

Twitter later sent a follow up tweet, which read simply: "Now, back to work."

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