Twitter’s initial public offering is said to be the most hotly anticipated one since Facebook Inc. But the micro-blogging company is trying to do everything to distance itself from the fiasco of Facebook’s IPO, which is said to be a case study on how not to take a company public.
Twitter said it will price its shares more modestly in order to have room to grow once it goes public. Analysts predict that Twitter might offer a smaller percentage of the company than Facebook in order to gain more appeal from investors.
Twitter has been cautious about its IPO, which it announced via a tweet that stated it submitted paperwork to start selling stock to the public. It was the opposite of what Facebook did when it made its announcement last February 2012 that gave investors a glimpse into the company’s financial performance.
Each time Facebook made a public filing, it got intense scrutiny that raised questions about its lack of mobile advertising revenue. The social network sold $16 billion in stock to investors during its IPO in May 2012 but its share price dropped in the following months due to doubts about its ability to remain profitable.
Twitter utilized the provision in the law that allowed companies with less than $1 billion in annual revenue to keep its financial information private from competitors and the press until it starts actively marketing its stock to the public. IT filed under the Jumpstart Our Business Startups or JOBS Act. That way, Twitter avoided the pitfalls that Facebook got while still managing to hype up its IPO.
It gave Twitter more control than Facebook had. Twitter can consult with the Securities and Exchange Commission about releasing its numbers and estimates. That way it avoids the pitfalls Facebook faced when it went public.