4 Oct 2013

Twitter to list on stock market

8:27 pm on 4 October 2013

Social networking company Twitter plans to raise $US1 billion in its stock market debut in documents filed with American regulators.

In the filing, revealed on Thursday, the seven-year-old company said it had 218 million monthly users and that 500 million tweets were sent a day.

It made a loss of $US69 million in the first six months of 2013, on revenues of $US254 million.

It will be the largest Silicon Valley stock offering since Facebook's listing in 2012, the BBC reported. Analysts said the offering was likely to get a good response.

"Social media is red hot," internet analyst Lou Kerner said. "Twitter is front and centre benefiting from market enthusiasm for all things social, and remarkably strong metrics."

The filing revealed Twitter's finances for the first time. While the company has never made a profit, its revenue has grown from just $US28 million in 2010 to $US317 million by the end of 2012.

About 85% of Twitter's revenue last year came from ad sales; the rest was from licensing its data.

The company takes in a significant portion of its ad revenue from mobile devices, an important metric often tracked by analysts.

As of 2013, more than 65% of the company's advertising revenue was generated from mobile devices, with more than 75% of Twitter users accessing the site from their mobile phone during that same time period.

Good news for users

Some analysts said the decision by the firm to raise capital indicated it was keen on improving the way people enjoy content on its platform and how advertisers connect with its users.

"Users should be happy about this," Forrester analyst Zachary Reiss-Davis said.

"It looks like Twitter is looking at how to enrich the experience and it understands that to build a successful service, they have to create something people like and want to come back to and spend time on."

Peter Esho, from Sydney-based Invast Financial Services, said Twitter's ease to use had seen it increase its user base, making it an attractive option for advertisers.

"I think what Twitter has working in its favour is that it's very easy to use: it doesn't eat up too much bandwidth for the average user in places where broadband penetration is low," he said.

The filing also revealed that two of the company's co-founders, Evan Williams and Jack Dorsey, own significant stakes in Twitter and could stand to take in significant sums from the company's stock market listing. Mr Williams owns 12% of shares in the company, while Mr Dorsey owns 4.9%.

Benchmark Capital's Peter Fenton, an early investor in the company, is the second-biggest shareholder, with 6.7% of shares.

Twitter indicated three weeks ago it had filed for a public stock market offering.

Under a new law passed by Congress in 2012, it did not have to reveal its financial documents because it had revenue of less than $US1 billion But by releasing the documents publicly, it gave an indication it hopes to complete its stock sale soon.