Twitter to IPO tomorrow with a US$13.9bn valuation

6 Nov 2013

In what is the biggest Silicon Valley IPO since Facebook went public last year, social media titan Twitter is set to float on the New York Stock Exchange tomorrow, valued at around US$13.9bn and seeking to raise around US$1.75bn.

The opening price for shares is expected to be in the US$23 to US$25 a share range.

The San Francisco, California, company’s ticker symbol will be TWTR.

In its prospectus released a month ago, Twitter reported revenue of US$253.6m but had a loss of US$69.3m.

The largest Twitter shareholder specified in the prospectus is co-founder Evan Williams, who owns 12pc of the shares. Other major shareholders include Benchmark Capital, which owns 6.7pc of the company; Twitter co-founder and chairman Jack Dorsey, who owns 4.9pc; and Twitter CEO Dick Costolo, who owns 1.6pc of the company.

While Twitter, with its 230m active users, may not be as large as Facebook, which has more than 1bn users, the IPO will be watched with intense interest.

The New York Stock Exchange has been busy testing and re-testing its computer systems and servers to make sure the IPO goes flawlessly, unlike the Facebook IPO in May last year, which was believed to have been stalled by technical hitches.

Bumpy beginnings, stellar growth

Twitter’s origins are part of the romance of Silicon Valley, or tech entrepreneurship in San Francisco, particularly. Often the subject of intense debate and scrutiny – summed up well in a book titled Hatching Twitter by New York Times tech blogger Nick Bilton – its origins can be described as tempestuous at best.

The side project of a podcasting company called Odeo that involved Dorsey and Noah Glass, Twitter was originally known as Twttr and was an attempt to use SMS short codes as a way of communicating with a small group of people simultaneously.

Dorsey and contractor Florian Weber created the first Twitter prototype, and Dorsey tweeted the first Twitter message at 9.50pm PST on 21 March 2006.

A year later at SXSW, Twitter had reached its tipping point with 60,000 tweets being sent daily. By 2010, this had grown to 50m tweets a day.

As of September 2013, more than 200m users transmit 400m messages a day on Twitter – 60pc of the tweets come from mobile devices.

Early in Twitter’s development, co-founder Noah Glass was forced out. In 2008, Williams took over the role of CEO while Dorsey became chairman. In 2010, Williams stepped down only to be replaced as CEO by Costolo, who was formerly COO.

Preferring to describe itself as a media company rather than a technology company, Twitter’s rapid messaging system has been credited with breaking news before mainstream media, such as the death of pop star Michael Jackson and the assassination of al-Qaeda leader Osama bin Laden.

While Twitter’s origins may seem ramshackle and turbulent, the company has stayed through to its original principles. It has never deviated from the 140-character rule and prefers to test new products and services externally with its audience rather than internally.

Tomorrow another chapter in the tech industry’s history will be written in what has to be one of the most hotly anticipated IPOs of 2013.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years