Tweet of the day: Twitter announces IPO

By Salvador Rodriguez, Los Angeles Times


As you may have heard, Twitter has filed for a confidential initial public offering of stock, so in case you aren't too familiar with the company, here are five quick things you should know.


It has 200 million monthly active users

Twitter hasn't said how many active users it has since February, when it announced that it has 200 million monthly active users. Surely the company's user base has grown since then, but at 200 million, Twitter is losing to Facebook by nearly 1 billion users.

However, this may actually be a good thing for Twitter -- investors may take it to mean that there's still a lot of room for growth.

It's expected to hit $1 billion in ad revenue in 2014

Like other social networks, Twitter makes its money through advertising. Companies, and even users, can pay to promote their tweets and their accounts to others. It's also possible to pay for a promoted trend, which is usually a hashtag designated by a company that will show up next to other top topics that users are talking about at that particular moment.

Twitter reportedly made $350 million in ads last year. And next year the company is expected to bring in at least $1 billion in revenue. That's important because thanks to a new law, having less than $1 billion in annual revenue allows Twitter to file for a confidential IPO, which leads us to our next point.

It has learned from Facebook's IPO mistakes

Unlike Facebook last year, Twitter has filed for a confidential, or secret, IPO. Thanks to a law passed last year called the JOBS Act, Twitter will be allowed to keep its financials secret up until three weeks before it starts pitching its IPO to investors and other analysts.

By filing this way, Twitter may reduce the amount of time that media, analysts, the government and investors have to scrutinize the way that it runs its business.

That's a luxury Facebook had to live without. Before its IPO, major holes were found with Facebook -- like its lack of a mobile plan at the time -- and concerns about the company quickly grew, leading to its underwhelming start in the public market.

It also owns Vine

Besides the Twitter social network, the San Francisco company also owns Vine, a short-video social network launched this year that has quickly taken off.

Vine already has 40 million users, and despite competition from Instagram the Twitter-owned social network seems to keep growing. Twitter isn't making any money from Vine just yet, but the possibility of future video ads on Vine offers the possibility of a second major revenue stream for the social media company.

It could be the last high-profile tech IPO for a while

No one else is in line right now. Facebook has gone public already, as have LinkedIn, Groupon, Pandora and Zynga (although that hasn't really worked out). And the other would-have-been top candidates have been purchased by bigger companies (Tumblr by Yahoo, Instagram by Facebook).

Next in line would appear to be Pinterest and Snapchat, but neither is making money just yet. Pinterest appears to be close toward generating revenue, but it still way off from going public.