Twitter on Thursday unveiled plans to pump up the globally popular one-to-many messaging service with a US$1 billion stock market debut.
The initial public offering (IPO) is expected to be the most sought-after since Facebook in May last year, a listing that faced numerous glitches on the NASDAQ and which saw the company’s share price slump before recovering this year.
Twitter outlined its plans in filings with the Securities and Exchange Commission, providing the first public insights into the San Francisco company that has rocketed to Internet stardom since its launch in 2006.
“Social media is red hot,” Internet analyst Lou Kerner said. “Twitter is front and center benefiting from market enthusiasm for all things social, and remarkably strong metrics.”
In the regulatory filing, Twitter disclosed that it had 218 million active users as of June 30, a 44 percent increase from the same point a year earlier. It reported that it lost almost US$80 million on nearly US$317 million in revenue last year.
Twitter brought in US$253.6 million in revenue in the first half of this year, but remained in the red with a loss of about US$69 million, the company said in the filing.
Some noted that Twitter would be close to breaking even this year if it had not spent slightly more than US$67 million on social television analytics firm BlueFin Labs.
Forrester analyst Zachary
Reiss-Davis sees the capital-raising move by Twitter as a sign the company is intent on improving ways people enjoy content on its platform and how marketers connect with users.
“Users should be happy about this,” Reiss-Davis said.
“It looks like Twitter is looking at how to enrich the experience and it understands that to build a successful service they have to create something people like and want to come back to and spend time on,” he said.
A challenge for Twitter will be finding money-making advertising methods that take advantage of the real-time, and short-lasting, nature of posts at the service, while not annoying users.
“Things on Twitter have very short shelf lives, and advertisers are going to have to adapt to that,” the analyst said.
He expected Twitter’s marketing to become integrated with other media, such as television, in what are referred to as “second-screen” experiences in which people delve into tweets while watching shows.
Twitter will trade under the symbol TWTR, the filing said, without indicating on which exchange the stock will be bought and sold.
Private share transactions have valued the company at about US$10 billion, making a billionaire out of co-founder Evan Williams who is reported to have a 12 percent stake.
Twitter did not give a date for the IPO, but said it would take place as “soon as practicable.”
Twitter reported that about 500 million Tweets are fired off daily.
While the number of users has grown, Twitter has been losing money since 2010, which is as far back as the financial statements go.
About 85 to 87 percent of its revenues come from advertising, mainly in the form of “promoted” or sponsored tweets.
Twitter offered the customary caution for investors, saying it faces risks if conditions shift.
“We may face challenges in increasing the size of our user base, including, among others, competition from alternative products and services, a decline in the number of influential users on Twitter or a perceived decline in the quality of content available on Twitter,” it said.