Twitter is expected to file for an initial public offering in late 2013 or early 2014. That much is widely known. Less attention has been paid to whether Twitter will make a normal IPO filing or if, as new rules allow, the company will try to go public in secret.
The Jumpstart Our Business Startups (JOBS) Act, signed into US law last year, lets firms with less than $1 billion in annual revenue keep their IPO filings confidential up until three weeks before they start marketing shares to investors in a “road show.” It was largely proposed and pushed by venture capitalists in Silicon Valley, who said it would stem a decline in US IPOs by reducing the burdens of going public felt by smaller firms. Ordinarily, a company has to make public a lengthy discussion of its financials, strategy, and risks months before an IPO, giving investors—and competitors—more of a chance to evaluate the stock.
In the first nine months since the JOBS Act went into effect, 59% of eligible companies availed themselves of the option to keep their IPO filings secret, according to an Ernst & Young study reported today by the Wall Street Journal. Twitter is likely to be eligible: It made $350 million in revenue last year, and it’s not expected to hit $1 billion until 2014.