NEW YORK – On Thursday, Twitter announced their plan to raise up to $ 1 billion through an initial public offering later this year or early next year. The IPO is the opportunity for the company’s founders and early investors to cash in on the micro-blogging service that has revolutionized public conversation but, according to reports is still losing money and facing challenges to attract new users and advertisers.
While the company did not say the number of shares or the targeted price range for the IPO, documents released on Thursday revealed that Twitter set a maximum amount of $ 1 billion for their public debut.
Thursday also marked the first time that potential buyers saw the financials behind one of the most anticipated IPO’s since Facebook’s debut last year. According to the company’s release, revenue for more than doubled in the first half of 2013 to $ 254 million. However, the company’s net loss grew by 40 percent to $ 69 million as expenses ballooned. With user growth slowing and advertising revenues falling, the net loss underscored the trouble that Twitter’s founders are facing in trying to monetize their groundbreaking service.
According to Brian Solis, an analyst at the Altimeter Group, ‘they certainly have a lot of work ahead of them to get mainstream America to understand.’
The release also shows that Twitter has recently valued itself at roughly $ 10 billion. The estimate is based on the number of share outstanding; if equity awards are included, Twitter’s total value swells to $ 13 billion. The company also revealed that they will use TWTR as their ticker symbol, but to this point they have not announced whether they will list on the New York Stock Exchange (NYSE:NYX) or the Nasdaq Stock Market (NASDAQ:NDAQ).
In just seven years, Twitter has grown to a social phenomenon that has helped to fuel revolutions, e.g. The Arab Spring, and the egos of wannabe celebrities alike. Today, the service has more than 215 million active users, no comment on how many are fake accounts, who send more than 500 million messages per day. Despite the ubiquity, Twitter remains an immature business, and the filing showed Twitter has far fewer users and generates less revenue per user than Facebook (NASDAQ:FB).