SAN FRANCISCO -- 140 characters could be worth $1 billion.
Microblogging service Twitter publicly filed its paperwork for an initial public offering Thursday afternoon, announcing its intention to seek a $1 billion IPO, though that figure could be a placeholder before the company later announces the size and targeted price range for its IPO. The company also did not announce if it will list on the New York Stock Exchange or Nasdaq, though it did say it will use the symbol TWTR.
Ev Williams, Jack Dorsey and Biz Stone originally formulated the idea of Twitter as a group-messaging app in 2006,
"They turned it from a toy to a tool," Gartner analyst Jake Sorofman said recently, "and now a platform and an ecosystem."
Twitter's massive growth under CEO Dick Costolo -- Twitter announced that it had reached 500 million accounts in 2012, two years after Costolo took over -- produced strong IPO buzz in the past couple years, but neighbor Facebook's rough Wall Street debut quieted much of the excitement. The Menlo Park company exercised a record-breaking IPO in May 2012 that valued CEO Mark creation at more than $100 billion, but problems with initial trades and doubts about Facebook's ability to generate revenues from its popular mobile app helped push shares from an initial price of $38 to less than $20 in the first year of public availability.
Perspectives changed just a couple months ago, as Twitter reportedly was filing its IPO paperwork confidentially. After showing that mobile revenues had accounted for 41 percent of its $1.6 billion in quarterly advertising revenue, Facebook again became a Wall Street darling, doubling its market capitalization to well above its IPO valuation and passing Intel (INTC) to become the sixth-most valuable tech company in Silicon Valley.
Twitter announced -- appropriately enough, with a tweet -- on Sept. 12 that it had filed IPO paperwork confidentially with the Securities and Exchange Commission, a process that has been in place for less than two years for companies with less than $1 billion in annual revenues.
The market for technology IPOs has swung Twitter's way of late. After only 22 of the 132 IPOs in the first eight months of the year were in the tech sector, a glut of such companies tested the waters in September and found treasure. In one week's time, six Silicon Valley tech companies brought in more than $1 billion combined, with enterprise-software providers Rocket Fuel and FireEye also experiencing large first-day "pops" that at times doubled their IPO stock price.
Wall Street's direction is also rather favorable for Twitter: While Facebook doubled its stock price in the third quarter, the tech-heavy Nasdaq gained more than 10 percent, with Yahoo (YHOO) and Netflix (NFLX) joining Facebook in setting all-time highs.
Twitter has the option of changing most of the terms of the IPO outlined in its SEC filing -- Facebook increased both the number of shares and its proposed range in the week leading up to its market debut. Companies typically wait at least 21 days between filing paperwork publicly and exercising their IPO, in order to meet with potential investors in what is called a "roadshow," which allows executives and underwriters to pitch their initial batch of shares and allocate orders.
Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.