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Can Twitter Build a Money-Making Business on 140-Characters?

Twitter filed the initial paperwork on Thursday for its long-awaited initial public offering of stock. Unlike typical IPOs, however, potential investors won’t get a peek at the company’s finances.

The nature of its filing suggests that the San Francisco company which offer a free social media service has yet to figure out how it will make money. Despite its global influence and oversized social prominence that could emerge as an issue. The microblogging service, which has about 200 million users worldwide, filed its preliminary prospectus, known as an S-1, with securities regulators using a provision of the Jumpstart Our Business Startups, or JOBS Act, that allows the company to keep its initial filings confidential if it has less than $1 billion in annual revenue.

Facebook faced a similar struggle with generating revenue despite the fact that it had little problem adding users. But as the Washington Posts business blog reports sometimes stock offerings are all about potential, and analysts say the company has much room to grow. Twitter’s stock offering is the most anticipated since Facebook’s rocky IPO in May 2012. Twitter, which describes itself as the global “town square,” says it has acquired 200 million active users as of last December since it launched in 2006.

Another question posed by tech analysts Peter Kafka and Mike Isaac of All Things D is whether Twitter can grow fast enough. After it announced that it had 200 million active users,a few months later, CEO Dick Costolo told employees he expected to get to 400 million users by the end of 2013, according to people familiar with the company.

Inside sources say that Twitter now has around 240 million users, which means it has been adding fewer than 4.5 million users a month in 2013. If it continued to grow at that rate, it would end this year around the 260 million mark — meaning that its user base would have grown by about 30 percent, instead of Costolo’s 100 percent goal.

Kafka and Isaac say that isn’t bad. Facebook, for instance, had grown its active user base by 33 percent in the 12 months leading up to its IPO in 2012. But Facebook was and is a much bigger company — it had 900 million users when it went public, and more than a billion today — and that size was a big selling point.

So Twitter’s coming IPO will be an interesting test of whether there really is something there for investors. Or it may prove a cautionary tale for CEOs who enter the IPO market when showcasing hope triumphing over experience.

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