Twitter filed paperwork today to begin the process of their long-awaited IPO, but we may not actually see the public offering until early next year.
The paperwork–which is underwritten by Goldman Sachs–was filed under the JOBS act, which means Twitter can keep things confidential as long as they have under $1 billion in revenue per year; sources close to the situation say we could see the offering as soon as December or January, however.
The micro-blogging network just became profitable last December with about $100 million in the final quarter, but experts say the company is on its way to making around $650 million. The announcement comes at around the time one analyst predicted in January of this year; Sam Hamadeh of PrivCo–a New York-based research firm–said that he expected Twitter to announce the IPO before the end of this year.
“By the time Facebook [made its market debut], it had been formally monetizing for four years and its growth rate was slowing,” said Hamadeh. “Meanwhile, if Twitter files to go public at the end of this year, it will hit just the right inflection point, where its revenue is growing in the triple digits, from $80 or $90 million in 2011 to $250 million last year and what we expect will be $500 million in revenue in 2013.”
Twitter CEO Dick Costolo was more cautious than optimistic last year after rumors began flying that the company would follow in Facebook’s path, saying they weren’t close to being ready for an initial public offering.
“We don’t want to be public until we have very predictable quarterly earnings growth. We’re not ready to be a public company for a couple years,” Costolo said.
Many are wondering why the company is going public now, just one year after it was reported that they had been imposing a restriction on all shareholders: no one who holds stock can sell more than 20% of their shares. As of 2011, Twitter was keeping to the “500 shareholder rule”, meaning they wouldn’t be required by the SEC to publicly disclose their financial results. With so much effort being made to stay private, there are questions being raised as to what changed the minds of the people in charge.
“The JOBS bill was not designed for a multi-billion dollar IPO managed by Goldman Sachs. It would be useful if the reporters could report on why Twitter might want to do this or, even better, find out why they did this,” wrote New York Times commenter Steve Rogers.