Twitter has made public its S-1 document, which formally announced a float, with the US Securities and Exchange Commission. The filing was made a month ago, but its details have only now been released.
It looks like the stock float will value the company at somewhere around US$12 billion – and maybe more. The stock is trading privately for US$17 a share, and stock options have been independently valued at more than US$20.
That means a big payday for Twitter’s major shareholders. They include cofounders Evan Williams (12%) and Jack Dorsey (4.7%), and CEO Dick Costolo (1.6%). A number of private equity firms also own substantial stakes, by dint of Twitter’s previous rounds of money-raising.
But the float plans to raise only US$1 billion. Still big money, but not enough to significantly dilute the shares of the existing stockholders too much. They include many Twitter employees, who receive modest salaries by substantial stock options.
They can’t sell their stock until 15 February, but that’s not long to wait. Once it’s publicly traded it will be a free-for-all.
As a public company, Twitter will be subject to the demands of Wall Street’s legion of analysts for constant growth. Its quarterly financials will be finely dissected, with demands for a consistent pattern of growth – from a company that has never made a profit.
Twitter’s revenues are now starting to grow significantly. They are on track to reach US$650 million this year, more than double last year’s figure of US$317 million. Revenues come from ads, and from sponsorship deals with sporting codes and TV stations. Revenues are also strongly US based – there is marginal income internationally.
There is an amusing story on the side. Some investors are so keen for Twitter stock before the flat that they have bought up shares in the similarly named by unrelated Tweeter Home Entertainment Group, which went broke five years ago, but whose stock still trades.
Huffington Post reports that Tweeter’s stock shot up from under 2 cents to 15 cents in less than an hour after the Twitter IPO was announced, before quickly dropping back to 5 cents. Its ticker symbol is TWTRQ (the ‘Q’ denoting a bankrupt company), while Twitter’s is TWTR.
The IPO is expected around mid-November.