Twitter to go public

Twitter has announced that it is to file for an IPO with the US regulators

Twitter has announced that it is to file for an initial public offering (IPO) with the US regulators.

The filing is confidential, as is allowed under US law for corporations with less than $1bn in revenue. Such companies do not have to reveal certain financial details until 21 days before starting on an investor roadshow.

Despite its popularity, the seven-year old social media firm has yet to break even, but investors expect this to happen this year, followed by an annual growth of upwards of 40 per cent, and have accordingly offered valuations of $10bn or more - some much more. However the IPO is likely to be significantly less than this as firms rarely offer more than 20 per cent of their shares in an IPO.

Unlike fellow social media pioneer Facebook, which floated last year, Twitter started with a focus on mobile and therefore will not have to change its advertising model significantly to suit new platforms.

The firm boasts more than 200 million regular users who contribute more than 400 million posts a day, the majority from mobile devices. It has generated income through targeted, inobtrusive in-stream ads.

"There was a lot of concern about whether they'd ever be able to insert advertising into their site," said Forrester analyst Nate Elliott. "They've shown it can be effective. They offer in many ways better measurement for marketers than larger companies like Facebook."

Twitter has also positioned itself as an adjunct to TV advertising, where users can draw attention to the programmes where ads are appearing and add an active element when discussing the shows.

Yesterday Twitter announced it was to buy MoPub - a mobile ad exchange, which began speculation that the long-expected IPO might be imminent.

However some industry specialists have urged the company to be cautious about changes that might alienate its users.

"If they start to put ads in, it's going to change the user experience. They haven't educated their users to accept the presence of ads," said Roger Kay, founder of Endpoint Technologies Associates.

Fellow traveller Facebook faced a rocky road after its IPO, partly as a result of failing to get its advertising model right, but yesterday reported its highest ever share price.