Twitter IPO as economical as its tweets with 27% discount

Costolo’s Message

Costolo and Chief Financial Officer Mike Gupta will lead the meetings, according to a person with knowledge of the matter, who asked not to be identified because the plans are private. Costolo and Gupta will be meeting today with banks including Goldman Sachs Group Inc. to practice their road-show presentation, according to another person with knowledge of the plans.

On the road show, Twitter, which has historically booked net losses, will point toward an adjusted measure of earnings before interest, taxes, depreciation and amortization to signal its profitability, one of the people said. The adjusted Ebitda excludes the effects of stock-based compensation and investments in servers, leases and networking equipment to support the company’s expansion, the company’s filing showed.

Adjusted Ebitda was $9.3 million in the quarter ended Sept. 30, compared with $2.9 million a year earlier.

Twitter also will describe the company as a conversational, public, real-time and distributed platform, as was outlined in its filings.

Spending Proceeds

With the money from the offering, Twitter may seek to expand globally and prove it can draw advertisers to the network. Advertisers can sponsor one of the service’s posts, paying to have it show up on users’ feeds even if they don’t follow the company.

Costolo is betting that the service’s popularity on mobile phones will help lure advertisers. About three-fourths of Twitter’s most active users accessed the service from mobile devices in the three months through September, compared with 69% in the year-earlier period, according to the filing. More than 70% of advertising revenue comes from those devices, a higher proportion than Facebook’s.

With an IPO, Twitter is set to cap its journey as a rudimentary site for short posts to a global megaphone for celebrities, politicians, businesses and more. The service came out of a failing startup from co-founder Williams called Odeo in 2006. Other co-founders include Biz Stone and Jack Dorsey, who was CEO in Twitter’s early days and now runs Square Inc.

Icahn, Bieber

The company’s site has become a destination for users to discuss everything from the finale of AMC series “Breaking Bad” to the unfolding of terrorist attacks and revolutions. Activist investor Carl Icahn used the platform to announce his discussions with Apple Inc. CEO Tim Cook, moving the stock with some updates. Pop star Justin Bieber, who has 45 million followers, has said things like “You will know my words, my heart #journals.”

Today there are more than 500 million posts, or tweets, each day, compared with 2 million per day in January 2009, the company has said.

Twitter will trade under the symbol TWTR on the New York Stock Exchange. The choice of the NYSE may let Twitter avoid the technical gaffes that plagued Facebook’s IPO last year on the Nasdaq Stock Market. It also follows years of the exchange trying to attract young technology companies away from its rival. While it missed out on Facebook, the NYSE won LinkedIn and Pandora Media Inc.’s IPOs in 2011.

Goldman Sachs is the lead underwriter of the IPO, joined by Morgan Stanley, JPMorgan Chase & Co., Bank of America Corp., Deutsche Bank AG, Allen & Co. and Code Advisors.

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