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Posted on 05 January 2012.
Looking ahead to the 2013 Initial Public Offering (IPO) calendar, the Twitter IPO is likely to occur in 2013 and will be one of the biggest IPOs of that year. The Twitter IPO will be a widely anticipated and sought after IPO in 2013. Depending on which other companies undergo IPOs in 2013, the Twitter IPO has the potential to be the biggest IPO of 2013.
With the monster Facebook IPO that is on tap for 2012 towering over the 2012 IPO market, Twitter is in no rush to hit the IPO market in 2012 with the Twitter IPO. While there are no concrete signs in early 2012 that the Twitter IPO will occur in 2013, there have been some recent moves by Twitter that indicate that the company is moving towards going public via an IPO by 2013. During 2011 Twitter started a transition in its corporate governance structure and management team that indicate that it is taking the steps necessary to become a publicly traded-company. Many of the people hired for their new management team have experience working with public companies.
While there appears to be no compelling financial need for the Twitter IPO to occur in 2013, since the company appears to be on sound financial footing (which some observers question) and does not appear to need to immediately raise capital to fund operations, there are a number of factors that may cause the Twitter IPO to occur in 2013.
First off, the stock market is experiencing a new wave of Internet IPOs, the biggest since the 1990s, with Internet sites such as LinkedIn and Groupon completing successful high profile IPOs in 2011, and Facebook ready to IPO in 2012. If Twitter has any intentions of going public via a Twitter IPO, then they need to get their act together and bring their IPO to market while the market for Internet IPOs is hot.
Second, the United States Security and Exchange Commission (SEC) requires private companies with more than 500 private investors to disclose financial information that public companies must disclose. While it is unclear when Twitter will have more than 500 private investors, trading in private Twitter stock via sites such as SecondMarket and sales of Twitter stock to private investors could cause Twitter to reach the 500 private investor threshold. Reaching this threshold usually causes companies to quickly accelerate their IPO plans, as private companies prefer to take advantage of the benefits of being a public company once they are required to disclose the same financial information as public companies.
At this early juncture, it is too early to speculate about what price the Twitter IPO might occur at and what the valuation of Twitter may be after the Twitter IPO. Ultimately, whether there is a Twitter IPO in 2013 and what valuation will be given to the Twitter IPO by the investment community will depend upon how Twitter and its Internet peers do over the next year and how hot the Internet IPO market is in 2013.
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