IPO Talk: Twitter Takes Center Stage

Did you just step aside from your Twitter account to check out this article about the Twitter IPO? If you did, your tweets have been contributing to the hype of this latest social media IPO. Yes, your latest 140 characters have made Twitter that much more popular. Whether you tweet about stocks or tweet about your latest meal, the Twitter IPO is sure to garner your attention.

Twitter recently announced that they were going public not from an official press release, but from a 140 character or less tweet.

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.

— Twitter (@twitter) September 12, 2013

Yes, Twitter officially announced going public via the platform that has over 218.3 million active users, according to TechCrunch.com.

Early indications suggest that the company is planning to sell shares around $17 to $20, which would put the amount raised at around $1.6 million if they sell about 80 million shares. Wall Street analyst have stated that Twitter will have around 545 million shares outstanding, thus a $20 estimate would value the company at $10.9 billion. According to PrivCo, Twitter is expected to make $500 million in revenue up from 2012 when Twitter saw revenue of $245 million. Going into the IPO this actually seems quite reasonable since Facebook looks about 20x price to sales.

So is Twitter the next hyped IPO? Possibly. It is really up to the business model that Twitter defines in their SEC filings. Are they capable of growth and gaining revenue via advertisements and paid sponsorship of Twitter tweets? The initial future looks relatively bright, but what's troublesome is their technology. For the most part, this technology can be replicated since Twitter does not have a patent to protect their 140 character tweets. The barriers to entry are minimal and companies that want to replicate the success and utilize the Twitter technology can do so. Thus, it will be interesting to see what the company releases in their IPO filings regarding the future of the company.

So what can you expect from Twitter's IPO? A lot of hype!

Therefore, Day 1 will likely be up, as anything below the IPO price will initiate lawsuits, so traders can potentially make gains on Twitter's IPO just like many did on Day 1 of Facebook's IPO.

As far as Twitter's future, I would expect to see the company maintain significant growth over the next few years.

In related news, it looks like the NYSE is preparing for the Twitter IPO. It would be nice to avoid the start of Facebook's IPO, which was delayed nearly 30 minutes.