Analyst: Never Mind What Twitter Has Said; It’s Filing to Go Public at Year End

Dick Costolo, the chief executive of Twitter, has repeatedly said that the company isn’t in a rush to go public. For its part, Wired magazine appears to believe him, too. Earlier this week, the outlet called the chances of a Twitter IPO in 2013 “slim” and described a delayed offering as a “smart move” given that “investors are still wary of social media companies in the wake of Facebook’s IPO.”

But not everyone buys Twitter’s foot-dragging act. PrivCo, a New York-based research firm that focuses on private companies, believes Twitter will file to go public in the fourth quarter of this year, largely because of Facebook’s botched public offering last year.

Citing a “source high up at [Twitter],” PrivCo founder and CEO Sam Hamadeh told us yesterday afternoon the company plans to do the exact opposite of what caused Facebook so much trouble — waiting too long to go public, arguably.

“By the time Facebook [made its market debut], it had been formally monetizing for four years and its growth rate was slowing,” notes Hamadeh. Meanwhile, if Twitter files to go public at the end of this year, it will hit “just the right inflection point, where its revenue is growing in the triple digits, from $80 or $90 million in 2011 to $250 million last year and what we expect will be $500 million in revenue in 2013,” he says. (Hamadeh’s figures come from his internal source, and he says they’re largely based on the growing success of Twitter’s advertising programs, two-year-old Promoted Tweets and “targeted” Tweets, unveiled last summer.)

Twitter also hopes to avoid following in Facebook’s footsteps by pricing its offering “more conservatively,” says Hamadeh, who anticipates the company will price its IPO at 30 times its 2013 revenue, or $15 billion. Says Hamadeh: “They don’t want people asking what’s broken at Twitter,” as they did with Facebook, which priced its own shares at 100 times the company’s earnings over the 12 months leading into its offering. (More specifically, Facebook’s stock was priced at $38, giving the company a $104 billion valuation. The company, whose shares subsequently plunged, falling all the way to the high teens at one point, is currently valued at $64.6 billion, with its shares trading at $29 apiece.)

At $15 billion, “investors who got in [including on the secondary market] at $7 billion or $8 billion or $10 billion won’t feel like they’re out of the money,” notes Hamadeh.

Twitter did not respond to a request for comment yesterday afternoon. But of course, a lot can happen in a year’s time. If Facebook’s shares continue to rebound, investors are liable to forget much about Facebook’s painful IPO.

So might Twitter.

“With the lock-ups and the high price and the high market cap, you could easily have another Facebook” situation with Twitter, says Scott Sweet, a managing partner of IPOboutique.com. “Remember that at one time Facebook was worth $50 billion, then it was worth $70 billion, then it came out at $100 billion.”

“You’d think investors have probably learned their lesson from Facebook – not to succumb to pandemonium and fall in,” adds Sweet. “The truth is that you just never know.”

Image: Logo courtesy of Twitter

Related Posts

Leave a Reply

PEHUB Community

Join the 12502 members of peHUB to make connections, share your opinion, and follow your favorite authors.

Join the Community

Look Who’s Tweeting

Psst! Got any hot tips?

  • This field is for validation purposes and should be left unchanged.

PE HUB News Briefs

RSS Feed Widget

Marketplace

VCJ Headlines (subscribers only)

RSS Feed Widget

Buyouts Headlines (subscribers only)

RSS Feed Widget

Reuters VC and PE feed

RSS Feed Widget