Twitter will face intense pressure to boost advertising revenue when it floats on the stock market later this year, Australian analysts say.
Twitter confirmed - by tweet, how else? - that it has filed papers for an initial public offering, ending weeks of speculation that it would follow rival Facebook onto the US exchange.
"We've confidentially submitted an S-1 to the SEC for a planned IPO. This tweet does not constitute an offer of any securities for sale," the company said on Friday.
The San Francisco company has taken advantage of a rule adopted last year by the Securities and Exchange Commission which allows "emerging growth" companies with revenues of less than a billion to keep financial details secret until closer to the IPO.
Australian traders expect Twitter to float about 10 per cent of the company, which was founded in 2006 and is estimated to be worth about $US10 billion ($A10.86 billion).
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It could debut on the New York Stock Exchange as early as November.
But the free microblog service, which has about two million Australian users and up to 500 million worldwide, will quickly face pressure to boost its income streams, analysts say.
And that could mean even more adverts.
"Once you have shareholders you've got to satisfy their needs for income and for capital growth," IG market strategist Evan Lucas told AAP.
"Whether or not the current business model is going to do that ... that's the question."
Twitter currently makes money by inserting adverts or so-called promoted tweets, fairly unobtrusively, into users' feeds.
The company is expected to earn $US582.8 million globally in advertising revenue this year and nearly $US1 billion next year, according to industry tracker, eMarketer.
But Mr Lucas believes shareholders will demand a better performance.
He pointed to Facebook's recent push for bigger profits from advertising as evidence of what can happen once a social network goes public.
Facebook launched on the US stock market in May 2012 with its shares initially plunging to nearly half the IPO price, before rallying in recent weeks only after news of big increases in mobile advertising revenues.
Its subsidiary Instagram also recently announced plans to carry promotions for the first time from next year.
"Twitter will come under the same sort of pressure," Mr Lucas added.
Peter Esho, a Sydney-based market analyst with Invast Financial Services, agreed that Twitter must prove strong and sustainable revenues to attract serious investors.
But he believes the firm has picked the perfect time to go public, with relatively buoyant US markets, strong momentum in the tech sector and Twitter's growing user base all making the IPO more attractive.
