Twitter plans to make its IPO filing public this week and then begin trading before Thanksgiving. This is a big step forward for the company and will reveal important business information to the public, such as a breakdown of the company's revenue stream, the official user numbers, the amount of money it wants to raise through the IPO, investment risk factors, and cost of shares. Presently Twitter's IPO price is estimated to be in the range of $28 to $30 per share, meaning that the company is valued between $15-16 billion.
Twitter has learned from the mess that was Facebook's IPO that it is important for a company to avoid extensive hype in advance and have absolute technical perfection on the launch date. Facebook's IPO in May 2012 was widely considered a debacle in the business world. Morgan Stanley has since blamed CNBC for overhyping the stock. According to a University of California-Berkeley study, CNBC does have the influence to increase a company's stock price even if their news coverage is negative. Compounding the problem, Nasdaq's computer problems on the day of the launch disastrously delayed trading. Nasdaq has since paid a $10 million settlement for civil charges claiming that its decisions and systems upset Facebook's IPO.
Twitter has taken advantage of a new law, which has allowed the company to keep plans for an IPO secret to avoid damaging hype by the press. A company tweet on September 12 stated that it "confidentially submitted an S-1 to the SEC for a planned IPO," but it was actually submitted in July. The S-1 form must be filed by nearly all U.S. companies that wish to go public. Usually the S-1 is filed and responded to publicly by government regulators, but under the new JOBS Act, Twitter was able to submit its S-1 to the SEC privately because it has an annual revenue under $1 billion. Thus Twitter has since received SEC feedback privately since August. Being able to file privately allows startups to avoid revealing business information while considering its options before going public, such as raising more venture capital or selling to another company.
Twitter is also likely to choose the New York Stock Exchange for its IPO. It seems obvious that Twitter has chosen not to use Nasdaq as its platform due to its involvement in the Facebook debacle. Although Twitter has sought to ensure a smooth IPO, there is always some uncertainty about what the eventual outcome will look like. Soon enough it will be determined whether Twitter's careful planning will pay off, and allow the company to avoid Facebook's fate.