Twitter's brand marks are seen as background of the speakers during their press conference in Sao Paulo, Brazil, on Februrary 20, 2013.
(Photo: Yasuyoshi Chiba, AFP/Getty Images)
Twitter disclosed on Twitter Thursday afternoon that it's in the process of filing for an initial public offering.
On its official Twitter page, Twitter wrote, "We've confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale."
The message comes straight out of the boilerplate language used on a typical regulatory filing when a company intends to sell publicly traded shares to investors.
So far, the company had not filed an official registration statement with the Securities and Exchange Commission, which is the first step in moving toward an IPO. By submitting the S-1 to the SEC in private, that gives regulators a chance to look it over and point out any issues before Twitter makes it available to the public, says Francis Gaskins of IPO Desktop.com. No price range for the stock has been set.
It appears that Twitter is taking advantage of a relatively new rule change which allows companies with less than $1 billion in annual sales to file paperwork confidentially with regulators. This gives the company time to work out any kinks in how they might be pitching the sale of the shares before they start marketing the IPO.
The timing of the IPO filing suggests that Twitter is getting traction with new initiatives, such as showing ads in user's Twitter feeds, according to Sam Schwerin of Millennium Technology Value Partners, which owns a small stake in Twitter.
The filing is also timed as the fourth quarter approaches - a traditionally strong period for social media activity and related advertising, Schwerin added.
Internet stocks are up strongly this year and shares of social network Facebook and professional network LinkedIn have rallied more than 50%. That should support Twitter's valuation during the path to the public market, he said.
Shares of LinkedIn and Facebook rose modestly in after-hours trading and CNBC financial news cable network reported that Goldman Sachs would be the lead underwriter on the offering.
Given the status of the filing at this point, Gaskins expected the deal to hit the stock market by early December. The fact that Facebook shares recently closed at an all-time record after many months of a subpar stock price may help fan demand for the stock.
Twitter's IPO comes just as demand for IPOs is starting to heat up. So far this year, 131 companies have filed for IPOs, which is up 44% from the 91 that filed at this point last year, says Renaissance Capital.