Twitter's IPO storms out of the gate, but some already sense trouble
Wednesday evening, Twitter Inc. issued a press release about its Thursday IPO via—what else?—the company Twitter account. The company would be putting 70,000,000 common shares on the open market, priced at $26 apiece, for a market value of $18.1 billion, trading on the New York Stock Exchange under the symbol “TWTR.”
We just priced our IPO. pic.twitter.com/NWXaO4Myq0— Twitter (@twitter) November 6, 2013
Hardcore users were quick to mock an apparent lack of platform proficiency.
@twitter Great job with the low-resolution image of your press release. Really expert tweeting, there.— dustin curtis (@dcurtis) November 6, 2013
@twitter great image looks good on mobile— Steve Kovach (@stevekovach) November 6, 2013
Naysayers or no, the mood was cheery as popular Twitter user Patrick Stewart rang the opening bell Thursday morning with 9-year-old Vivienne Harr, who kept a lemonade stand running an entire year to protest slavery, as well as a representative of the Boston Police department. These were the sorts of users who helped to build Twitter, the NYSE said.
An hour and a half later, trade began in earnest, with bankers at bookrunner Goldman Sachs relieved to see that shares were fetching $45.10 apiece, or 73 percent above the initial public offering price. It quickly edged up past $50 but leveled out came back down toward $45 and has been dancing around that figure for most of the day.
Phew!— Anthony Noto (@anthonynoto) November 7, 2013
By noon, the New York Times’ DealBook reported, analyst Brian Wieser of Pivotal Research had seen enough to downgrade TWTR to a “sell” rating. “He said that to justify the $45 price today, Twitter would have to generate more than $6 billion in annual revenue by 2018.” This year’s revenue is expected to be a tenth of that.
Wieser recommended picking up stock in Facebook instead, as the two companies are still farther from being direct competitors than anyone assumes. Facebook had a comparatively disastrous IPO, and its shares had been in the low-$20 doldrums for much of the summer, but of late they’ve been trending closer to where Twitter plateaued today. Twitter's stock ultimately closed at $45.41 but today but has since dipped further in after-hours trading.
While these stocks duke it out in the mid–two figures, of course, Google continues to ride above $1,000 a share, and LinkedIn is trading at around $215, even though both prices fell today. If either Twitter or Facebook wants to be king of the tech mountain in the market’s eyes, they have a long climb ahead.
Photo by Jason Reed