Retweet to Wall Street

By Ben Walsh
September 13, 2013

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After a series of coy comments stretching back to December, yesterday Twitter announced it had filed for an initial public offering. We know this because the company tweeted so, not because the registration documents, or the company’s financial disclosures, are publicly available.

Under the the JOBS Act that President Obama signed into law on April 2012, Twitter’s IPO documents don’t need to be made public until 21 days before the company starts meeting with potential investors.

The filing is not, as it has been variously described, a secret IPO. It’s more of a confidential negotiation process, made possible by the JOBS Act. Matt Levine points out that during Twitter’s extra-quiet period, the SEC can request changes to the company’s filings, which should in theory mean fewer last minute addendums to its prospectus.

Groupon’s founding CEO Andrew Mason pointed out that a little less public scrutiny won’t necessarily mean worse information for investors:

The price will be set once investors have a chance to look at the company’s financials. Dan Primack reports that the most recent valuation datapoint, based on a single private broker-dealer’s offer, is $31 a share, or $15.5 billion.

Mike Isaac notes that Twitter’s trajectory has followed a strategy its CEO, Dick Costolo, mapped out two years before joining the company:

All startups should think of the long road in front of them in three phases. [D]uring phase 1, you need to be passionate about the product (or service); during phase 2, you need to be passionate about your customers (*and* the product); during phase 3, you need to be passionate about revenue (*and* customers *and* the product).

The question for Twitter is the perennial one for public companies: how fast is it growing and is that fast enough for investors? Mike Isaac and Peter Kafka write that last year Costolo told employees he expected the company to have 400 million users by the end of 2013, but now looks likely to fall short of that mark. It currently has 240 million users, and is adding 4.5 million a month.

When we get the company’s full filing, Steven Davidoff bets “it will be full of surprises, such as special shares that allow the founders to keep control of their company, and other maneuvers to take advantage of the JOBS Act relief. The question is whether this relief is really doing anything that helps the investing public”. — Ben Walsh

On to today’s links:

Tech
On tech meritocracy: “I don’t really think that a kid coming out of Harvard or MIT is actually well connected” – Reuters

Crisis Retro
Lehman’s cold dead hand is still reaching for money – Matt Levine

JPMorgan
JPMorgan’s credit derivatives guru is not sorry – Bloomberg Businessweek

The Fed
Surely the Obama Administration is joking about this ‘Have Larry Summers run the Federal Reserve’ thing! – Jason Linkins
“The comprehensive case against Larry Summers” – Michael Hirsh

Financial Arcana
Why keep risk on the books if you can transfer it? – Bloomberg
Gillian Tett’s six things wrong with the financial system post-Lehman – FT

Ouch
Krugman on why Krugman doesn’t tweet: “I have better things to do with my time” – NYT

Wonks
What’s happening to bonds and why – Mohamed El-Erian
Whither bond returns? – Felix

Alpha
Party almost over – WSJ

Classic Bess
“Hank Paulson’s Dry Heaves Might’ve Scared The Bejesus Out Of Rahm Emanuel And Harry Reid But Wendy Paulson Had Been There, Done That” – Dealbreaker

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