Twitter used its own service to announce it started the paperwork process for an initial public offering (IPO), a deal that will likely be one of the highest-profile IPOs since its social media rival Facebook went public in May 2012.
The Wall St. Journal reports
Goldman Sachs has been tapped as lead underwriter for the deal. While new rules permit Twitter to keep its IPO documents private, the company is reportedly valued at U.S.$9 billion, far less than Facebook’s valuation of U.S.$100 billion when it went public.
Yankee Group Research Director Sheryl Kingstone comments
“It’s kind of ironic that a company that built its DNA around expedient and constant open streams of communications will now be forced into a quiet period—praying for as little hype and communications as possible. Twitter must prove that it can truly generate revenue from its ad business. Facebook learned that hard lesson last year, as it was tripped up with a belated disclosure
. Twitter has a significantly less favorable brand impression compared to Facebook, garnering just a 31 percent highly favorable rating vs. Facebook’s 51 percent. However, with its acquisition of MoPub
and its DNA rooted heavily in mobile, this is all about revenue potential. Mobile ad revenue will become an increasing larger part of the overall digital ad market, growing to roughly 20 percent of overall spend by 2017. The potential to grow even faster is not out of the realm of possibility because of mobile’s ability to deliver contextually relevant ads incorporating location and time, which increases the potential return on the investment through better close rates.”