Posted on 04 October 2013.
Like many in the technology and stock related industry, we are excited for the Twitter IPO. What started as more of a wishful anticipation has turned into a reality over the last few months, as we have been following their journey to initial public offering closely. In September, Twitter had taken the first steps to going public, as they filed their S-1 document confidentially under the JOBS Act. This new law protects all businesses from divulging their revenue early in the IPO process as long as their revenue is under $1 billion per year.
At that point it was also announced that Goldman Sachs would be the lead underwriters for Twitter.
Now, as we progress into the beginning of October, we want you to be prepared and know what to look out for with the Twitter IPO.
Because Twitter filed under the JOBS Act, there are a few things that we can count on in the next few weeks. For starters, the documents that Twitter initially withheld during the first filing will have to be made public very soon. At least before the “road shows” process begins. Following the recruitment of Goldman Sachs, Twitter also enlisted the advisement of Morgan Stanley, Deutsche Bank, Bank of America Merrill Lynch, and JPMorgan. Insiders close to the Twitter execs explained that the additional banks will be serving as Twitter’s credit lines through the process. They estimate that these lines can each extend up to almost $1 billion.
As of right now, insiders suspect that the total value of the Twitter IPO between $15 and $16 billion which would put the share prices at $28 and $30 each. It also seems that the NYSE will be a better home for Twitter than the heavily tech populated NASDAQ. Following the pace they are on, this can put Twitter on the right track to be public traded before Thanksgiving.
In the following weeks it’s important to pay close attention to key areas of the documents that Twitter will have to file publicly. Take a look at the list we’ve put together below to see where:
Financial Data: Interested investors are going to want to analyze the past and recent trends, gross margins and net profits/losses by the company.
Management’s Discussion: Where Twitter’s own executives discuss the different advertising campaigns, profit streams and potential earnings. Though remember, they want you to invest, so take their words with a grain of salt.
Risk Factors: One of the most important sections to focus on. Here will be the list of challenges the business faces.
Executive Compensation: How much management earns and in what forms.
Principal/Selling Shareholders: Any current shareholder with 5% or more will be listed here.
Capital Stock Description and Voting Agreements: All interested investors will want to know who will have control over voting rights and the stock class.
Many professionals and investors alike are hoping that the Twitter IPO fares better than Facebook did when they went public. It seems that since they went public, there has been more of a realistic grasp on pricing and projections. The next few weeks will surely be an exciting time for Twitter, as long as the government shutdown doesn’t last too long. With this pace we should be able to start buying Twitter on the NYSE before Thanksgiving!
What do you think? Will you be following the Twitter IPO closely? Let us know!
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