Twitter Just Filed a Secret IPO—Why 'Secret'?

Thank Congress.
Twitter ipo

Twitter is going public, the company announced today (via Twitter). It's submitted its S-1 document, which contains all sorts of juicy information about the company's business and risks ... but secretly.

So, the company is going public privately? Who said they could do that? Well, Obama said.

Last year, the president signed the Jumpstart Our Business Startups (JOBS) Act, which let small companies -- those making less than $1 billion in annual revenue -- keep their filings private until three weeks before their road show. Twitter isn't projected to make $1 billion in revenue until next year. 

"Keeping its IPO filing secret until the last minute could help Twitter avoid the overheated anticipation that Facebook had to deal with ahead of its disastrous IPO," Zach Seward explained in QuartzIndeed, Facebook's IPO was totally disastrous, as you might recall, and much of the disaster was precipitated by last-minute changes to the S-1.

As Khadeeja Safdar explained for The Atlantic in a long investigative piece, Facebook cut its earnings forecast weeks before its public debut, which scared away most of the support from large institutional investors. It's very likely that this is why the stock flopped on its opening day -- the big money had lost interest.

This provision of the JOBS Act is supposed to protect smaller companies from a similar fate and encourage more firms to go public by making the road to IPO less fraught. At the same time, Twitter's S-1 is going to come out eventually (publicly announcing a private filing seems like the first step) at which point the madness will continue as regularly scheduled: Twitter will tell institutional investors how great they are; analysts will set their targets and phone in recommendations; and CNBC will titillate retail investors will the loudest analysts around.
 

 

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

A Stop-Motion Tour of New York City

A filmmaker animated hundreds of still photographs to create this Big Apple flip book

Video

The Absurd Psychology of Restaurant Menus

Would people eat healthier if celery was called "cool celery?"

Video

This Japanese Inn Has Been Open For 1,300 Years

It's one of the oldest family businesses in the world.

Video

What Happens Inside a Dying Mind?

Science cannot fully explain near-death experiences.

More in Business

Just In