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Twitter lifts veil on its IPO plans

SAN FRANCISCO — If Lady Gaga were to send a message to her 40 million Twitter followers summarizing the company’s debut on Wall Street, it might very well say: “Twitter IPO. Mobile. Born This Way.”

Twitter, which was built on messages so short that they could be texted on a cellphone, revealed Thursday just how central smartphones and tablets are to its business — underscoring the technology industry’s rapid transition to a mobile world.

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But despite clear evidence that it is quickly increasing its revenue from mobile advertising, the company also disclosed that it had not yet turned a profit, that it had been steadily losing money, and that its user growth had been slowing significantly since the end of last year.

Last month, the company announced that it would go public but had filed confidential papers. On Thursday, it made its prospectus public, providing a first glimpse at its financial health.

The most hotly anticipated stock sale since Facebook went public last year will make early employees and investors in the company very rich.

Evan Williams, one of the company’s founders, owns 12 percent of the company, a stake valued at $1.2 billion in August, when the company last priced its employee stock options. Jack Dorsey, another co-founder, owns stock worth about $483 million.

The investment firms Benchmark Capital, Union Square Ventures, and Boston’s Spark Capital are also large stockholders, as is DST Global, a Russian firm that made a fortune on its sizable early investments in Facebook.

Twitter’s IPO seizes on the continued growth of social networking and mobile devices, two trends the company has ridden to enormous growth.

Founded seven years ago as a side project in a floundering startup firm, it is now one of the world’s biggest public forums, ranking alongside Facebook. Aspects of the service, like hashtags denoting specific discussion topics, have infiltrated popular culture.

Twitter has not set a price for its offering. But when it last set an internal price for employees, in August, it valued the stock at $20.62 a share, suggesting a value at that time of $9.7 billion.

That figure is equal to 22 times the sales that the company posted in the 12 months through June. Such a valuation is high, even for a young technology company, analysts say.

But Twitter has shown steady growth in advertising sales, and investors will value the stock based on their expectations of future revenue and profit.

And much of that advertising revenue is on mobile.

In its filing, Twitter said that 75 percent of its users entered the service through mobile devices during the second quarter and that 65 percent of its revenue came from mobile ads.

That is sharply higher than the numbers of Twitter’s much bigger rival, Facebook, which had virtually no revenue from mobile when it went public last year — and struggled to prove to investors that it could be a truly mobile company.

The social network disclosed that it planned to use the ticker symbol TWTR, but it did not specify a stock exchange. It also listed a $1 billion fund-raising target.

The company hopes to complete its offering by Thanksgiving, people briefed on the matter have said. But if the markets prove unwelcoming — a possibility if the government shutdown goes on for weeks — the company is likely to postpone the offering until next year.

Twitter has not set a price for its offering. But when it last set an internal price for employees, in August, it valued the stock at $20.62 a share, suggesting a value at that time of $9.7 billion. That figure is equal to 22 times the sales that the company posted in the 12 months through June. Such a valuation is high, even for a young technology company, analysts say.

“Everyone wants to write, is this good, bad, or ugly?” said Richard Greenfield, an analyst with BTIG Research. “This is just a piece of the puzzle. We’re still missing other pieces of the puzzle to determining how attractive or unattractive this might be.”

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