Headlines on Thursday afternoon and Friday morning said all kinds of things about how Twitter was somehow going under the radar with its initial public offering (IPO) filing with the Securities and Exchange Commission (SEC). The ideas of some kind of clandestine, supersecret filing came from Twitter’s own tweet on the announcement, which said they’d “confidentially” filed an S-1 prospectus to the SEC.
All that really meant was that the information was to be kept private, which is actually fairly normal in the game of going public. Filing an S-1 is not a promise to enter the market, it’s merely a sort of draft version of their planned filing, which is then deliberated back and forth between the company and regulators.
These initial filings are now legally kept private, thanks to a new law, and it’s a good idea because they may or may not be accurate or in the format expected by the SEC. The new rule was created because it was not uncommon for these initial filings to hurt a company in the press. Just as a PhD student doesn’t just write and submit their doctoral thesis without input from professors and mentors, neither do startups hoping to finally go IPO.
The new rule from the SEC means that companies like Twitter can put their toe in the water and see how it is in there before taking the plunge. It also means they can keep their privileged information to themselves until they’re really ready to go public. Something that could otherwise hurt them if they figure out that they’re jumping in too soon.
Twitter is the first really large IT company to use these new rules, so in that regard, it has also become a sort of test bed for the press as we are forced to consider these new rules for the first time.