Twitter’s arrival on Wall Street is expected to generate tens of millions of dollars in fees for banks, with Goldman Sachs on track to reap the biggest gains after securing the mandate to be the lead underwriter for the hotly anticipated initial public offering (IPO).
The investment bank is understood to have beaten its Wall Street rival, Morgan Stanley, for the position. The latter was the lead underwriter for Facebook’s stock-market debut, the last major tech IPO.
But problems with the social-media giant’s listing – investors balked at the offer price, triggering declines in the stock after the debut – appear to have given Goldman an edge with Twitter.
The Facebook listing also landed Morgan Stanley with a $5m (£3m) fine from the securities regulator in the US state of Massachusetts.
The regulator, William Galvin, claimed a Morgan Stanley banker had coached Facebook on how to disclose information to Wall Street analysts, potentially putting ordinary investors at a disadvantage.
Bagging the top advisory role for the Twitter listing is a coup for Goldman. With its platform continuing to grow in popularity, the company has long been suspected of plotting a move to go public, and its debut promises to be one of the most high profile in recent times.
Launched in 2006 by Jack Dorsey, Biz Stone and Evan Williams, Twitter now attracts more than 200 millions users every month, with large corporations, celebrities, governments and private individuals around the world using the platform to publish 140-character messages in real-time.
Appropriately, the listing plans came to light with a tweet published on the company’s official account on Thursday evening: “We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This tweet does not constitute an offer of any securities for sale.”
Put another way, Twitter announced that it had it had filed the initial paperwork for a listing with the Securities & Exchange Commission, the US market regulator, using a new rule which allows companies with less than $1bn in revenues to submit the documents confidentially.
The rule allows such companies to keep details of their finances private until the moment they begin courting investors.
The tweet announcing the IPO filing was followed by one that simply said: “Now, back to work”. It came attached with a picture showing Twitter employees at a bank of desks.
Estimates floating around Wall Street suggest that the service could be worth anywhere from $10bn to $20bn when it makes its market debut, which is expected next year.
This year, the company is expected to be on track to more than double its annual revenues to around $500m. The estimate, from the private company research firm PrivCo, is at the modest end of the scale. eMarketer expects Twitter to earn around $580m in revenues in 2013. Next year, it expects the service to pocket around $1bn in ad revenues.
Goldman Sachs declined to comment. Morgan Stanley did not respond to a request for comment.