Sweet fancy ketchup, Twitter (NOTYET: TWIT) just announced that it filed top-secret IPO paperwork. The clever little company tweeted yesterday saying: "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." Now let's all get in there and tear up that S-1 so that we can figure this puppy out.

Hold up... confidential? Why? How?

Over-the-character limit
Twitter's SEC filings have been buried under the JOBS act. A provision for start-ups -- like little ol' Twitter -- allows companies with under $1 billion in annual revenue to file documents secretly. Then, a few weeks before the company kicks off its roadshow, the filings, and all the back and forth with the SEC, are brought to the public. The value for start-ups is that companies can avoid extended periods of bad press, and some of the hemming and hawing that has dragged on businesses like Facebook .


Twitter is just the most recent brand to jump on the JOBS bandwagon. According to Ernst & Young, 63% of eligible companies used the confidential filing option in the first year of its availability. The act also allows "emerging growth" companies to avoid revealing additional information that investors have gotten used to seeing. Companies can choose to reveal just two years of financial information -- instead of the usual three -- and can opt to keep many details about executive compensation out of the public eye, as well.

Awesome -- we know nothing
That's not really true -- we do have some information to work off of. Based on its trading in the secondary market, it looks like Twitter is running with a valuation over $10 billion. Estimates from that market are subject to lots of caveats, but it's better than nothing -- which is what Twitter has offered up.

We also know that Twitter is pulling in less than $1 billion in annual revenue, and that it's not likely to break that barrier this year. Reports have put revenue growth at close to 100% every year, and estimated that 2014 will be the year that the company first breaks $1 billion.

It would be hard to think of a better time for a big social player to go public. Facebook has finally gotten back above its IPO price, and investors seem happy with its performance. That's not surprising, as the company announced a 53% increase in revenue last quarter. On top of Facebook's success, LinkedIn's shares hit a career high this week, valuing the company at $32 billion. The business continues to play an increasingly vital role in corporate hiring, and it put up a 59% increase in quarterly revenue last quarter.

So we're all buying Twitter?
No. The news is big and fun and exciting and not at all surprising, but the black box is still pretty dense. Right now, we don't know enough to make a real decision on Twitter. The business is fundamentally similar to Facebook in that it sells advertising for most of its revenue. Actually, in that way, it's much like almost every content provider, digital or not.

But Twitter is much smaller than Facebook, right now. Facebook has well over 1-billion users, while Twitter is sitting around 200 million. Investors and analysts are excited about the company's future because of the potential for Twitter to integrate with other media. Tweets while you watch TV, tweets running alongside other online commentary, and -- thanks to Twitter's recent acquisition of MoPub -- tweeted ads targeted directly to your phone.

That might all end up being an unassailable model, but it seems like some core piece is missing. Maybe that piece will become clear when we finally see the S-1, but I have a feeling it's just not in place yet. Until I see it, I'll be happy to watch the circus from the sidelines, where I don't have to worry about getting my head bitten off by a lion.

The tech world has been thrown into chaos as the biggest titans invade one another's turf. At stake is the future of a trillion-dollar revolution: mobile. To find out which of these giants is set to dominate the next decade, we've created a free report called, "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out which companies are set to dominate, and we'll give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free!

The article Twitter! IPO! Buy It! Now! originally appeared on Fool.com.

Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Facebook and LinkedIn. The Motley Fool owns shares of Facebook and LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Income Investing

Grow your nest-egg.

View Course »

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

Add a Comment

*0 / 3000 Character Maximum

1 Comment

Filter by:
terry5444

THE UNITED NATIONS ( ALL l) A L L AGREE SYRIA USED POISON

GAS TO MASACURE AND KILL THOUSANDS OF ITS OWN PEOPLE

WERE NEXT ON THE LIST . IRAN AND RUSSIA PROMISE TO HELP

RABBI SICK ANIMALS , THERE STALLING FOR TIME AND THE

RIGHT MOMENT . TIME TO TURN TO GOD, YES GOD
=============================================================

September 13 2013 at 9:53 PM Report abuse rate up rate down Reply