top of page
Search

Twitter’s IPO Plans: Convincing Investors of Security

  • Writer: Rachel Zalupski
    Rachel Zalupski
  • Oct 5, 2013
  • 2 min read

Updated: Aug 18, 2018

Does Twitter have what it takes to emerge as one of the strongest IPOs we've seen yet?


Twitter filed for a “confidential” S-1 IPO on Sept. 12 with the Securities and Exchange Commission under the JOBS (Jumpstart Our Business Startups) act. This act permits companies with under $1 billion in revenue to file for an IPO without revealing all details.


"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." - @twitter, 9/12/13

Most hope that Twitter’s story is nothing like Facebook’s. And so far, it won’t be.


Facebook filed for an initial public offering with the Securities and Exchange Commission February 2012. They had an aggressive approach, looking to make US$5 billion which would have made it one of the largest technical IPOs and the largest Internet IPO to date. Facebook’s rocky road essentially contained sloppily dressed CEOs, a delay in trading on the NASDAQ and the knowledge that the banks who underwrote the filing had to buy shares in order to keep the stock prices high. Some, in hindsight, believe that Facebook was overvalued. The attention Facebook garnered during this time made it impossible for anyone to ignored the company when their stocks took a hard hit for a few months. Due to the attention, Twitter seems to be taking a more conservative approach to their IPO.


Granted, Facebook was much larger than Twitter is during the time they went public and more was expected from them i.e. $100 billion in shares. This chart from the Wall Street Journal says it all:

Yep, that’s right, Twitter is actually losing money. However, Facebook’s debacle of an IPO as well as the size of Twitter, as the third bar shows, has led them to play their game incredibly safe which, in the long run, could help them out.


Twitter’s biggest challenge will be marketing this IPO as a secure decision for investors. Buzzfeed points out advertising made up 85 percent of their revenue last year. With only one revenue stream, it may be difficult to produce investments when, if this stream fails, Twitter isn’t really left with anything else.


Those who want to advertise through Twitter have three choices. Advertising takes the form of promoted tweets, trends and whole accounts. These tweets, trends and accounts can be geo-targeted to certain types of people or areas where they believe will generate the highest number of click throughs. However, in the case that Twitter proves to just be a fad, advertisers and investors may find themselves in trouble. In the upcoming weeks we will see how Twitter handles the internal pressure of those who want their investments protected and if they can rise to the challenge in making this a more graceful and more successful process than Facebook did.


 
 
 

Comments

© 2023 by Rachel Anne Zalupski. Proudly created with Wix.com

bottom of page