#TwitterIPO: Let the Frenzy Begin!
This article comes from Yahoo Finance and is an analysis on the recent announcement of Twitter’s IPO. The tweet heard around the world came yesterday afternoon stating, “We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.” Immediately Wall Street was running wild with speculation over what the company could be worth, who the underwriters were, and whether or not Main Street investors would get fleeced as badly on this IPO as they all did on Facebook. The analysts in this article mention that we are unable to see and Twitter data for quite some time and this must be due to Facebook’s recent IPO and the demand for social media today. So far details are very scarce and this is due to the Jumpstart Our Business Start-ups Act. This allows companies with less than $1 billion in revenue can file for IPOs without having to disclose much of anything about their underlying operations until at least 21 days before their “roadshow.” Because of this, Twitter did not have to reveal any information about revenues, valuation, executive compensation, or even business strategy. This is the first company that we have seen use this JOBS act that was put into place by the Obama administration. The analysts do not seem very fond of a company to be able to keep all of their information private until 3 weeks before the opening. Until last summer, early investors in Facebook were underwater and it was unclear that advertising via social media would be a sustainable business model once users transitioned to mobile. Those fears were put to rest on July 24th when Facebook destroyed earnings estimates and revealed that 41% of its advertising revenues were coming from mobile. After this information was announced, it was only a matter of time as to when Twitter would go public. With little numbers known about Twitter, Wall Street has begun to value twitter and currently...
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