Why Twitter’s IPO announcement has come at a perfect time

It’s been a long time in the works, but Twitter has finally announced that it is to float on the stock market as it prepares its IPO.

As is the way of these things, the news was announced in a tweet from the microblogging platform, whose intention to float comes just over a year after fellow social network Facebook went public.

Twitter wrote last night: “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.”

The expected figure for Twitter’s worth is predicted to be anywhere between $10bn and $15bn which, it’s safe to say, isn’t quite at the $102bn Facebook finally went for. Yet it’ll still provide a healthy dividend for investors, having put approximately $1.2bn in.

Exact figures are difficult to ascertain – the ‘confidential’ aspect of the announcement relates to Twitter taking advantage of a new rule that companies with less than $1bn in revenues can privately submit their documentation.

As a result of this, Twitter’s timing could scarcely have been better.

Facebook’s start after going public was rocky, to say the least. But that’s behind the Palo Alto giant; the company has recently overtaken its float price and is currently valued at around $109bn.

The social network oversaw an interesting 12 months of acquisitions. Everyone knew that Facebook’s main message was expanding its mobile strategy in 2012, but the purchase of Instagram in September, as well as the launch of Facebook Home in April showed serious intent.

Are there comparisons with Twitter’s acquisition strategy? If Vine and MoPub are anything to go by, the similarities are apparent.

Earlier this week mobile ad exchange network MoPub announced it had been acquired by Twitter for $350m, with CEO Jim Payne writing on the company website: “We can’t wait to join the flock and continue to build incredible products for publishers.”

Vine was bought out in October, evidently as Twitter’s attempt to do to the mobile and social video arena what Instagram had done for mobile and social photos. Last month, Twitter announced that Vine had hit 40 million users.

The potential of monetisation in the mobile space is a key reason as to why shareholders would want to get on board – possibly the most influential factor of them all.

And here’s the difference: Facebook has been scampering to alter its strategy to become mobile first, whilst Twitter has been mobile first for almost as long as it’s been around.

As Payne noted: “Like MoPub, Twitter has been “mobile first” since their inception, which makes our two companies a natural match.”

Micke Paqvalen, CEO and founder of social platform Kiosked, believes that whilst Twitter is taking the correct path forward, there’s still a lot of work to do.

“Filing for IPO means that Twitter will now be under huge pressure to show that it is a profitable business, and its advertising model will play a huge role in deciding its value,” he said.

He added: “The integration of Vine means that the social network is already thinking about engaging its community through interactive visual content. To demonstrate profit, it’ll be necessary for Twitter to demonstrate that it can monetise this content effectively, and this can be done by making images and video directly shoppable.”

Of course, time will tell as to how this will play out. But with a decidedly more conservative estimate than Facebook’s offering, Twitter founders Jack Dorsey, Evan Williams and Biz Stone will hope for a steady upward curve rather than the peaks and valleys of their rival’s IPO – and for now, they’re going the right way about it.

What’s your view of Twitter finally going public? Has it come at the right time?

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