Post date: Nov 07, 2013 3:8:30 PM
Twitter, the 140-character messaging service connecting politicians, celebrities and journalists with the public, is now preparing to go public in Silicon Valley's largest initial public offering since Facebook.
SAN FRANCISCO, UNITED STATES (NOVEMBER 06, 2013) (REUTERS) - Twitter Inc. is expected to begin trading on Thursday (November 07) in the hottest IPO (initial price offering) of the year. The microblogging network, which has yet to turn a profit, has amassed 230 million users in seven years, including heads of state, celebrities and activists.
Twitter priced its initial public offering above its expected range to raise at least $1.8 billion, in a sign of strong demand for the most highly anticipated U.S. public float since Facebook Inc.
The microblogging network priced 70 million shares at $26, above the expected range of $23 to $25, which had already been raised once before.
The IPO values Twitter at $14.1 billion, with the potential to reach $14.4 billion.
The company hopes to woo investors with revenue growth despite having posted big losses over the past three years. In October, The eight-year-old online messaging service reported that revenue almost tripled to $316.9 million in 2012. In the first half of 2013, it posted revenue of $253.6 million but had a loss of $69.3 million.
With all the added attention to the stock's launch, comes added pressure to keep consumers and shareholders happy, according to Gabriel Kahn, professor of journalism at University of Southern California's Annenberg School for Communication and Journalism.
"The struggle for Twitter is that it's still a very narrow component of 140-character bits of communication, that's been its strength, but all technology companies find that they need to add new bells and whistles in order to keep users coming back, so I think the product is going to have to evolve as well," says Kahn.
Twitter's IPO comes a year after the rocky May 2012 stock market debut of another Silicon Valleygiant, Facebook, the stock of which plunged to below half its opening price of $42 per share in its first months on the market. However, its stock price has since rebounded, selling above $50 dollars (USD) for the first time in September 2013.
According to Kahn, there is much to be learned from Facebook's early IPO falters.
"On the one hand they have Facebook as a negative example to use as it's the steps not to follow, that is, make sure you're actually listening to your investors, demonstrate that you actually do care about the stock price and if you can do that you'll probably avoid a lot of the earlier pitfalls that Mark Zuckerberg fell into," he says.
The service's emphasis on real-time communication in 140 characters or less - whether it be about breaking news, organizing protests, promoting events, or chatting with friends about a TV show on air - sets it apart from rivals such as Facebook. About half of all U.S. adult Twitter users said they get news through the social media platform, according to a recent Pew Research survey.
"I use it for entertainment. I use it for business. I'm a journalist so I tweet a lot of my stories and co-writer's stories," says Josh Topolsky, Editor-in-Chief for theverge.com, an online media and news website Topolsky has over 125,000 Twitter followers.
"I'm a comedian and I promote my tour dates, connect with my fans and I put material out," saysGreg Fitzsimmons, who has over 60,000 followers on Twitter.
Twitter's debut will be the culmination of its journey from a side-project to a sociocultural phenomenon, helping to redefine the nature of global communications by linking once lofty and unreachable politicians, celebrities and journalists with millions around the world.
Since its founding in San Francisco in 2006, it has grown to approximately 2,000 employees based in 15 offices globally. Its staunch advocacy of free speech around the world - nothing other than direct personal threats are barred from Twitter - has helped it become an important avenue through which news and viewpoints are shared, from the first inklings of the U.S. military assault on Osamabin Laden's compound to Obama's tweeting "Four more years" when he won re-election.
Co-founder and former CEO Evan Williams is Twitter's largest shareholder, with 12 percent of the shares, while co-founder and chairman Jack Dorsey owns 4.9 percent. Biz Williams, another co-founder, does not appear on the list of top shareholders. Current CEO Dick Costolo owns 1.6 percent.
Twitter is expected to trade on the New York Stock Exchange on Thursday, under the ticker TWTR.