The Difference between Facebook and Twitter IPO Filing

Twitter building

Twitter recently submitted its initial public offering (IPO) filing with the Securities and Exchange Commission (SEC) indicating its plan to raise $1 billion. The company revealed that it will be trading under the ticker symbol “TWTR,” but will still be contemplating whether to trade at the New York Stock Exchange (NYSE) or Nasdaq where most of the technology companies including Facebook, Google, and Microsoft are listed.

There were reports that the company chose to trade its stock at the NYSE to prevent going through any technical glitch, which was endured by Facebook during its IPO. Sources said Twitter learned from Facebook’s IPO experience.

IPO Filing: Twitter & Facebook Compared

Analysts and observers covering the technology industry cannot avoid comparing Twitter’s IPO filing with Facebook because it is highly anticipated just like its rival’s public offering last year.

The first notable difference between the two social media companies is the filing strategy. Twitter took advantage of the JOBS act and initially filed its public offering documents confidentially in July, and confirmed its planned IPO via Tweet on September 12.

In comparison with Facebook, the social network giant went through several months of publicity before filing its preliminary prospectus last year.

Bloomberg contributor Paul Kedrosky described Twitter’s S-1 filing as “stunningly boring.” He said, “The thing that stands out is that nothing stands out; it’s sort of stunningly boring. This is a really straightforward IPO document, which maybe exactly what the market needs right now.”

In terms of valuation, Twitter is recently valued at around $13 billion while Facebook was valued at approximately $104 billion. The social network giant’s valuation is obviously bigger than the micro-blogging company. Facebook’s initial offering price was $38 per share while Twitter’s offering price is believed to be at around $20 a share.

In terms of financial results (one year prior to IPO), Twitter declared that its revenue was $316.9 million and it has a net loss of $79.4 million while Facebook recorded $3.7 billion revenue and $1 billion net income.

The stock structure of the Twitter and Facebook is also different. Based on its S-1 filing, the co-founders of Twitter, Jack Dorsey and Dick Costolo who also serve as chairman and CEO, respectively do not have the same amount of control over the company compared with Mark Zuckerberg, co-founder and CEO of Facebook. Evan Williams and Biz Stone are the two other co-founders of Twitter.

Twitter has one class of stock, which means shareholders have the same level of control over the company’s direction while Facebook has dual-class stock structure wherein Zuckerberg has more power compared with shareholders.

Charley Moore, executive chairman of Rocket Lawyer Inc opined, “It doesn’t appear Twitter is going to be one of those founder-controlled entities. Here you have a company that is probably going to be more democratic than some of those other businesses may be.”

Based on its filing, Twitter has 215 million monthly active users (MAUs) sending 500 million tweets per day while Facebook had 845 million MAUs generating 2.7 billion likes and comments per day.