Billions are something to twitter about
NEW YORK/ SAN FRANCISCO: Twitter shares jumped 73 percent in a frenzied trading debut that drove the sevenyear- old company’s market value to about $ 25 billion (R256bn) and evoked the heady days of the dot-com bubble.
The strong performance is encouraging for the venture capitalists who have backed other consumer web start-ups, such as Square or Pinterest, though it sounded alarm bells for more cautious investors.
“@ twitter opening at $ 45/ share? Almost 50x revenues! We are officially in another tech bubble,” tweeted financier Steve Rattner.
The stock closed its first day of trade on the New York Stock Exchange at $44.90 a share after hitting a session-high of $50, nearly double the initial public offering price of $26 set late on Wednesday.
Twitter could raise $2.1bn if an underwriters’ over- allotment is exercised, as expected, making it the second-largest internet offering in the US behind Facebook’s $16bn IPO last year and ahead of Google’s 2004 IPO, according to Thomson Reuters data.
Fans believe Twitter, which has 230 million users, has established itself as an indispensable internet utility alongside Google and Facebook, and that it has only scratched the surface of its potential as a global advertising medium.
“When people use Twitter they are following certain people, they’re searching for specific information,” said Mark Mahaney, an analyst at RBC Capital Markets. “There are powerful marketing signals that are almost Google-esque, something that Facebook doesn’t really have.”
The IPO was shadowed for months by Facebook’s troubled 2012 debut, in which the shares quickly fell below their offering price amid trading glitches and subjected the company and its lead banker, Morgan Stanley, to accusations that they had been greedy in pricing the deal.
Twitter’s opening went without a hitch, prompting Anthony Noto, the Goldman Sachs banker who led the IPO, to write a simple Tweet: “Phew!”
Still, Twitter may find itself subject to criticism that it had priced the shares too low and left more than a billion dollars on the table.
The 70 million IPO shares represent about 13 percent of the company’s common shares. Twitter was the most actively traded stock on Thursday, with about 117 million shares changing hands.
Heavy demand for the IPO was apparent before the final pricing. Twitter was able to price the IPO above an already raised indicative range, and the deal still attracted investor subscriptions that totalled 30 times the number of shares on offer, according to market sources.
At Twitter’s headquarters in San Francisco, offices opened early and hundreds of employees flocked to the 9th floor cafeteria to watch the festivities on TV while eating “cronuts”, a croissant-doughnut hybrid, made by Twitter’s resident chef, Lance Holton.
Twitter was derided by many in its early years as a silly fad dominated by people talking about what they had for breakfast.
But Twitter quickly penetrated popular culture in unexpected ways, with its open design and broadcasting format attracting celebrities, athletes, politicians and anybody who wanted to share short, punchy thoughts with a digital audience.
Its business potential developed more slowly, and the company appeared to be floundering as recently as three years ago, when it was riven by management turmoil and service outages.
Under Dick Costolo, who took over as chief executive offer in October 2010, Twitter has rapidly ramped up its money- making engine. – Reuters
FINANCIAL BLAST: A trader raises his hand just before the Twitter IPO begins on the floor of the New York Stock Exchange in New York on Thursday.