Five Things to Know About Twitter's IPO

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TECH SEPTEMBER 13, 2013

Five Things to Know About Twitter's IPO

This piece originally appeared at newstatesman.com.

Twitter has announced its plans to join the stock market. We answer five questions on the social networking site’s plans for stock market flotation.

How did the company announce its plans to join the stock market?

On Twitter of course. The company sent out a tweet saying "We've confidentially submitted an S-1 to the SEC for a planned [initial public offering]."

Twitter said little else about its flotation plans, refraining from giving a timing or price for the offering.

How much is Twitter worth?

Investors have valued the microblogging site at more than $10bn (£6.3bn).

But how does Twitter actually make money?

Mostly through advertising and companies paying for promoted tweets. These tweets post on people’s timeline, typically reaching 200 million active users, who alone send more than 500 million tweets a day.

According to advertising consultancy eMarketer, Twitter is on track to post $583m in revenue in 2013, up from $288m in 2012.

What effect do analysts think floating Twitter on the market will have for the company?

Analysts have said it could result in increased advertising because there could be a drive for increased advertising revenues post-flotation.

"There's a few issues [such as] how many revenue streams can be developed beyond just advertising, the impact of more people accessing the service via smartphones," said Colin Gillis, a New York-based technology specialist at BGC Partners told the BBC.

So why now has Twitter decided to float the company on the stock market?

Andrew Frank, social media expert at technology research company Gartner, speaking to the BBC offered some possible reasons: "[The IPO] gives its investors a way to get some of the money back that they put into the company at the beginning.

"It gives the employees a similar kind of event to reward them for the success they've had so far. And it gives Twitter itself extra funds to invest in new projects and innovation."

This piece originally appeared at newstatesman.com.

Heidi Vella is a features writer for Nridigital.com

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