Twitter social media site files documents for initial public offering

Social media site Twitter has announced, in a tweet, that it has submitted papers for a stock offering: “We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale,” the company tweeted on Thursday.

The San Francisco company has taken advantage of 2012 federal legislation for an initial public offering (IPO) that allows companies with less than $1 billion (752 million euros) in revenue in its last fiscal year to avoid submitting public IPO documents. This confidentiality provides an advantage for companies in that they can keep their financial results secret until they are closer to pitching their stock to investors.

The IPO has been long expected and the company has been increasing its range of advertising products in recent months. Most of the company’s revenue comes from advertising. Facebook, which went public in May 2012, had advertising revenue of $1.6 billion in the April-June quarter of this year. By 2015, Twitter’s annual advertising revenue is expected to rise to $1.33 billion.

Twitter has become one of the fastest-growing and most influential social media services, used widely by celebrities and journalists. It has been valued by private investors at more than $10 billion and, according to advertising consultancy eMarketer, is on track to post $583 million in revenue in 2013.

Twitter’s IPO, though much smaller than Facebook’s, could still generate tens of millions of dollars in fees from the underwriting mandate itself. Assuming the company sells around 10 percent of its shares, or $1 billion, underwriters could stand to divide a fee pool of $40 million to $50 million. Goldman Sachs has been cited in media reports as the likely lead underwriter.

jm/lw (Reuters, AP)