Twitter has confidentially submitted an S-1 to the the U.S. Securities and Exchange Commission ahead of a planned initial public offering, the company said in a tweet on Thursday.
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 (@twitter) September 12, 2013
The micro-blogging company’s initial public offering has long been anticipated given the popularity of its service and its business is growing rapidly. Twitter is expected to deliver $500 million revenue for the current year. Private investors' valuation for Twitter is around $10 billion.
Although the company is so quiet regarding its plan to take the company public, the signs were obvious. Last Tuesday, Twitter announced its transaction to acquire MoPub, a mobile advertising exchange start-up for $350 million in stock.
The acquisition is part of the micro-blogging company’s strategy to enhance its advertising revenue. Kevin Weil, vice president of revenue product at Twitter said, the company plans to improve the core business of MoPub because it offers a key opportunity to extend many types of native advertising across the mobile ecosystem through MoPub exchange.
Dick Costolo, chief executive officer of Twitter further strengthened the fact that the company is preparing for an IPO because he refused to answer questions regarding the issue after his speech on leadership at TechCrunch Disrupt conference.
Generally, executives of companies preparing to submit paperwork with the SEC go through a silent period to prevent sharing information that might affect the market.
Twitter is the latest social networking company to go public. Facebook Inc (NASDAQ:FB) went public last year, and raised $105 billion from its offering. The social network giant suffered a technical glitch during its first day of offering. Facebook’s stock price suffered a steep decline due to concerns over its ability to improve its revenue from mobile. However, the company regained its value and it is now trading around $44.75 a share, higher than its IPO price of $38 per share after proving that its mobile advertising strategies are successful.
Twitter’s acquisition of MoPub prior to its planned public offering showed that it doesn’t want to go through the situation experienced by Facebook Inc (NASDAQ:FB) last. The company wants to make sure that it has the necessary tools to generate strong advertising revenue.
Facebook CEO Mark Zuckerberg offered advice to Twitter regarding its impending IPO at the TechCrunch Disrupt conference. Zuckerberg said "Don't worry about it, and don't be afraid. He added, “I’ve been very outspoken about staying private as long as possible. But in retrospect, I was too afraid of going public. I don’t think it’s necessary to do that.”
Twitter took advantage of the Jumpstart Our Business Startup (JOBS) Act in filing its S1-S registration privately with the SEC. Under the law, companies have 21 days not to disclose certain details of its planned public offering before campaigning to investors.