Twovember? Twitter Flaps Towards A $1bn IPO Next Month

By on October 7, 2013
Twitter1

The social networking giant has said it plans to raise $1bn in its stock market debut, penned in for November.

In the manner of Salome, performing the dance of the seven veils, Twitter has announced more details of its feverishly anticipated stock market debut – it’s aiming to raise $1bn and we can expect the IPO next month.

The S-1 form, submitted to the US Securities Exchange Commission, also revealed some of Twitter’s vital statistics. The social network has 218 million monthly users and the platform plays host to 500 million tweets each day.

The company has never made a profit, a trend which looks set to continue for the time being – it made a loss in the first six months of 2013, a 41% rise compare with the loss in the same period last year.

But the losses are unlikely to scare away investors – there’s a heavy whiff of potential hanging about the company. Revenues have jumped significantly, up 107% in the first six months of 2013. Twitter has grown its revenues from $28m in 2010 to $317m at the end of 2012.

Around 85% of the company’s revenues last year came from ad sales, the remainder from licensing its data. Mobile seems to have been a successful market for twitter, with 65% of its overall advertising revenues coming from mobile and 75% of users accessing the site from their smartphones.

Analysts have suggested the company will be valued at between $12bn and $15bn when it floats – making it the largest Silicon Valley stock offering since Facebook’s IPO. But $12bn is still a far cry from Facebook’s $104bn valuation at float. A sign that analysts have learned a lesson from Facebook’s disastrous performance post-list.

The report also revealed the names of those set to hit the jackpot when the social network goes public. Evan Williams, Twitter’s co-founder owns 12% of shares in the company – his co-founder Jack Dorsey owns 4.9%. Twitter chief executive Dick Costolo owns 1.6%. Good times all round at Twitter HQ.

Interestingly, unlike Facebook and LinkedIn, Twitter will only have a single class of shares – meaning equal voting rights for all shareholders, putting average Joe on equal footing with the founders. Some have speculated it is because of Twitter’s lack of strong founders (Dorsey and Williams have taken a back seat, letting relative newbie Costolo run the company since 2009).

The company hasn’t yet revealed if it will be floating on NASDAQ or the New York Stock Exchange – we guess we’ll find that out when the next scarf is removed.

The exciting deluge of IPO news doesn’t stop there though. Closer to home, Royal Mail shares are proving an alluring prospect for investors.  Demand for the shares has been high enough for the government to sell them at the top of the 260p – 330p price band.

With the government planning to offload 62% of the business to investors, it is shaping up to be a bumper windfall for the Treasury’s coffers. And if the demand calls for it, business minister Michael Fallon and pals have said the government might sell an additional 15% of its stake – in an ‘over-allotment’ option. To borrow chancellor George Osborne’s phrase de jour – why not make hay while the sun shines?

Shares in the Royal Mail will begin trading in full on 15 October. Under the terms of the share sale, a 10% stake will be shared among Royal Mail employees.

Meanwhile the Communication Workers Union is planning on holding a ballot to strike over the privatisation, a strike could be held on 23 October…at which point the IPO will have already happened. Disruption perhaps but not as they planned it…

http://www.managementtoday.co.uk/news/1214994/twovember-twitter-flaps-towards-1bn-ipo-next-month/

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