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Twitter Releases IPO Documents


Twitter has revealed more details about its planned initial public offering. Late yesterday afternoon, the company filed public papers with the Securities and Exchange Commission, laying out its intention to raise $1 billion by selling stock. It is the first public look into the company's finances.

NPR's Steve Henn reports.

STEVE HENN, BYLINE: Twitter isn't just a place where people gather to talk, it's become the thing everyone talks about. In the past seven years, Twitter has invaded every possible nook and cranny in popular culture.

UNIDENTIFIED MAN #1: There was a Twitter war between Chris Brown and a comedian named Jenny Johnson.

HENN: It encroaches in seemingly every TV argument.

UNIDENTIFIED MAN #2: It sounds like what you're saying is that Twitter ought to jump on anyone who is being offensive or abusive towards women.

HENN: Like the media kudzu, it keeps spreading - popping up in unexpected places.

UNIDENTIFIED WOMAN: Now the Pope says that following him on Twitter could illuminate the path to heaven.

HENN: But until yesterday afternoon, outsiders could only guess at what the business looked like from the inside. So what did we learn about Twitter in its filings? Well, it's smaller than most people expected. And it's not growing nearly as fast.

BRIAN SOLIS: That revenue wasn't what it would be, that it's operating at a loss, that its expenses are very high.

HENN: Brian Solis is a social media analyst at the Altimeter Group.

SOLIS: But I have to say that I am bullish on this platform for one specific reason, and that is its complete upheaval of what we know of as traditional media.

HENN: In comments he made last year, Twitter's CEO, Dick Costello, said the service had roughly 200 million users and he expected it to double in size this year. But in the public paperwork filed yesterday, Twitter revealed it had only 215 million users. And even figuring out who a real user is on Twitter, and what's a robot re-tweeting content automatically, can be tough.

CLARK FREDRICKSEN: Twitter has a big challenge ahead of it in that its user base is relatively small.

HENN: Clark Fredricksen follows digital advertising companies for eMarketer.

FREDRICKSEN: Yahoo had 800 million users. Facebook has 1.1 billion users. And Google has, you know, in the realm of a billion as well. Twitter is a lot smaller than that.

HENN: And its initial public offering reflects it. Facebook raised more than $16 billion when it went public. That company was valued at close to 100 billion. And the figures for Twitter might change a little bit, but right now it says it hopes to raise just $1 billion in its IPO.

FREDRICKSEN: They don't have the scale necessarily to compete with those companies.

HENN: Twitter earns less per user than Facebook does. And while it's on track to collect more than half a billion dollars in revenue, mostly by selling ads, that's less cash than many were expecting to see.

And according to Twitter's perspective, the company is still losing money. Nonetheless, Twitter does have a story for potential investors and advertisers. It goes like this: We might not be the biggest company out there...

SOLIS: But we have very high engagement with our user base.

HENN: People interact on Twitter. So if you advertise on Twitter and you're clever about it, consumers will interact with you. And Brian Solis says that's powerful. But it's not Twitter's only selling point.

SOLIS: I think Twitter's key strength is that it's inherently mobile.

HENN: While Facebook struggled to convince investors it had a plan for mobile, Twitter was built for mobile phones first. The company now has to wait 21 days before formally pitching investors. But if all goes smoothly, Twitter could go public in just about one month.

Steve Henn, NPR News, Silicon Valley. Transcript provided by NPR, Copyright NPR.