Twitter hopes to raise $1B in IPO
Surging sales and broad appeal likely to make offering a hot item
SAN FRANCISCO — Twitter Inc. didn’t need more than 140 characters to tell the world it was going public. With Thursday’s regulatory filing, it became an #openbook.
In what is the most-anticipated technology-company offering since Facebook Inc., San Francisco-based Twitter made public its S-1 prospectus Thursday and said it is seeking to raise $1 billion in its initial share sale.
The company didn’t specify the number or price of shares it will offer, using the $1 billion as a placeholder to calculate registration fees.
The document also showed Twitter is more than doubling revenue annually, even as it remains unprofitable.
Goldman Sachs Group Inc. was listed as the lead underwriter, along with Morgan Stanley, JP Morgan Chase & Co., Bank of America Corp. Deutsche Bank AG, Allen & Co. and Code Advisors.
The prospectus removes the veil of secrecy that surrounded Twitter’s financials since the company said on Sept. 12 it had filed confidentially for an initial public offering.
It under line show the microblogging service, founded in 2006, has evolved from a simple site for 140-character updates to a booming onlineadvertising business that generated more than $253.6 million in the first six months of this year.
“It’s a hot area,” said Francis Gaskins, president of IPOdesktop.com, who added that Twitter’s broad appeal will make the share sale one of the most watched in recent history.
“People understand this and they use it.”
With Twitter taking the wraps off its S-1, the company will soon embark on a road show to market to investors.
The IPO will test a market that has been burned in recent years by the offerings of Internet companies such as Facebook, Groupon Inc. and Zynga Inc., all of which plunged below their offering prices within six months of going public. While Facebook shares have since climbed back, Groupon and Zynga are still trading below their IPO prices.
The offering will be pivotal for chief executive Dick Costolo, who in 2010 became Twitter’s third CEO in as many years. He is credited with bringing management discipline, rapid hiring and a business plan to a company that was bogged down by a lack of focus and frequent technical outages.
Twitter’s S-1 showed that revenue in the first six months of the year was $253.6 million, up from $122.4 million in the first six months of 2012. It said advertising revenue per timeline view in the three months ended in June was 80 cents, up 26 per cent from the same period a year ago.
Twitter posted a net loss of $69.3 million in the first six months of 2013, compared with a net loss of $49.1 million in the same period a year ago.
“The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our common stock and enable access to the public equity markets for us and our stockholders,” Twitter said in its prospectus.