Twitter is getting poised for an initial public offering, joining the tech likes of Facebook, Zynga, Pandora, and Groupon, predicts a firm that studies soon-to-IPO businesses.
Greencrest Capital says that Twitter might make a public debut this year, an offering could come in 2014, and the amount could be higher than previously thought, perhaps as much as $11 billion.
The prediction is rooted in the hiring of several new top-level managers at the 6-year-old social media website, as well as the refined photo app that Twitter is now offering to better compete with photo-sharing social network Instagram.
Twitter is also becoming more profitable with promoted tweets that allow users and businesses to pay for a tweet that appears high in users’ feeds. The promoted tweets focus more heavily on users who click the link.
Twitter is also aligned with Pinterest, working with it over other social websites.
Twitter is expected to pull in $1 billion in advertising revenue by 2014, according to Bloomberg, nearly half of which would be generated by mobile advertising revenue, based on eMarketer’s figures.
Those are all reasons why the San Francisco-based microblogging website could be getting ready to make the move in the next year, according to Greencrest Capital.
Though a valuation is difficult to estimate, analysts are approximating it at upwards of $11 billion – that's what it's currently trading for on secondary markets.
"This [estimate] makes sense as growth in users and new monetization efforts are both yielding fruit and pointing toward a good 2013 for Twitter," said Greencrest's Max Wolff.
This figure is far higher than what analysts originally posited – originally $3.7 billion in January 2011 and then $8 billion seven months later.
According to Business Insider, because secondary markets are illiquid compared to public markets, private valuations aren't entirely predictive of a business's future value as a public company. However, before Facebook went public 10 months ago, the stock changed hands at $29.30. It's now at $28.
According to Forbes, Facebook currently has a market cap of $60.8 billion. Zynga ($1.9 billion) and Groupon ($3.4 billion) are much smaller. The three tech companies have done significantly worse than originally expected.
Wolff says Twitter is in a much better position than Facebook as compared to just before the social media giant went public.
If Twitter does well, it could reinvigorate investor confidence in tech startups.
"After Facebook's post-IPO flop, there was a need for a new hero of tech," Wolff said. "Twitter is showing better engagement growth than Facebook…. I don't think anyone is selling [Twitter shares] under $9.5 billion right now."
Twitter surpassed the 500-million user mark last February.
Executives at the social networking website are mum on the topic. In September, Twitter CEO Dick Costolo told CNBC he wasn’t concerned with an IPO, and that growing users, his employee base, and rolling out ads were his focus.
Investors aren't going to pressure Twitter either, Costolo said.
"Nothing external to the company has had any bearing on how I think about when to take Twitter public or not to," he said.
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