Social media company Twitter Inc. announced on September 12 that it had filed for an initial public offering with the U.S. Securities and Exchange Commission.
Such an event could be of interest to anyone considering investing in technology stocks as part of their trading strategy.
While companies have traditionally released statements to indicate their intention to hold a primary offering, the social media company made the announcement through a Tweet.
“We’ve confidentially submitted an S-1 to the SEC for a planned IPO,” the social media company said in the tweet. “This Tweet does not constitute an offer of any securities for sale.”
Valuations for Twitter
Analysts have provided varying estimates as to what the company is worth, and GSV Capital Corp., one of its investors, recently valued the company at approximately $10.5 billion, according to Bloomberg. This figure was 5 percent higher than an estimate provided in May.
Some market activity has indicated that Twitter could be worth far more. Wedbush Securities analyst Michael Pachter recently stated that after the social media company announced that it had filed for an IPO, its stock was trading at a price that would put the firm’s market capitalization at closer to $15 billion, The Washington Post reported.
Amid these multi-billion-dollar valuations that are being provided, the social media company has recently enjoyed several milestones, announcing earlier in 2013 that has attained 200 million active users who send 400 million tweets every day, according to the news source. As its membership has grown, the Twitter has also started focusing on getting more high-profile users to be active on the social media company.
The primary offering that Twitter has applied for is an event that has been highly anticipated by many. This comes after the flotations that have been made by Zynga Inc., Facebook and Groupon Inc., came with substantial challenges. After these firms went public, within six months, they experienced a drop of more than 50 percent in their market value, Bloomberg reports.
Amid these disappointing results, chief executive officer Dick Costolo will have a hard time alleviating the concerns of investors, who are worried that Twitter could potentially encounter the same fate. However, even though other high tech primary offerings have experienced these challenges, there is substantial anticipation surrounding the Twitter flotation.
“This is obviously one of the seminal IPOs that the industry has been waiting for,” Byron Deeter, who works as a partner at Menlo Park, California-based Bessemer Venture Partners, told the news source. The firm does not invest in Twitter.