preparing to go public.
But rather than do it in a conventional way, Twitter will go with a “confidential” IPO.
What is a confidential IPO?
It’s an IPO that lets Twitter avoid the spotlight that comes with going public.
Confidential IPOs are a part of the JOBs Act which passed on April 5, 2012.
The SEC says that it’s for “emerging growth” companies. An emerging growth company has less than $US1 billion in revenue.
The confidential IPO lets Twitter avoid publicly releasing financials until 21 days before its roadshow. The roadshow is when Twitter’s management travels around to big institutional investors selling the stock.
Typically, companies that do the confidential IPOs are genuinely confidential in their approach. They don’t go announcing it on Twitter, like Twitter did.
We assume Twitter announced its secret IPO because it was getting hounded by the press and it just couldn’t continue the process.
There’s almost no reason not to do a secret IPO as far as we can tell. It allows a company to not have to deal with the public knowing about how the SEC is treating the S1 filing. It avoids the rampant speculation that dogged a company like Groupon during the filing process.