Twitter to offer 70M shares priced at $17-$20 to raise up to $1.4B in IPO(techcrunch.com)
techcrunch.com
Twitter to offer 70M shares priced at $17-$20 to raise up to $1.4B in IPO
http://techcrunch.com/2013/10/24/twitter-to-offer-70m-shares-in-ipo-priced-at-17-20-per-share/
33 comments
It looks like TC didn't look at the table in the S-1 correctly: http://edgar.sec.gov/Archives/edgar/data/1418091/00011931251... (top of page 154)
That page + the "Several of the company’s directors and executives are sharing stock" (sharing? These are shared shares as opposed to all those unshared shares) indicates not a lot of care went into the writeup.
That page + the "Several of the company’s directors and executives are sharing stock" (sharing? These are shared shares as opposed to all those unshared shares) indicates not a lot of care went into the writeup.
It seems like the trend lately is to float a tiny amount of shares to the public. From my perspective this creates an artificial supply problem for the stock and makes higher valuations easier as you need less institutional buy in to maintain the price, and a few good quarters can result in disproportionate gains in the market.
Can anyone comment on that or shed some light? As a potential investor, those factors make me shy away from these investments as it makes the stock more volatile to changes and puts the fate of the stock in a few large holders hands.
Can anyone comment on that or shed some light? As a potential investor, those factors make me shy away from these investments as it makes the stock more volatile to changes and puts the fate of the stock in a few large holders hands.
It worked really really well for Groupon. (Well for their key stockholders at least). But this is the key ...
As a potential investor, those factors make me shy away from these investments as it makes the stock more volatile to changes and puts the fate of the stock in a few large holders hands.
Good, you're being smart about it. Not everyone will be, there will be a number of people who say "Gee, Twitter is everywhere this is going to be a huge stock some day." and will jump in with both feet. Betting with their feelings rather than an analysis of the fundamentals. For someone to 'win big' you either need someone to 'lose big' or a lot of people to 'lose somewhat.' Once there is enough float for the market to balance out the real expectation of the company will emerge (positive or negative).
As a potential investor I think buying it at $10 is probably reasonable and re-selling when it gets back to $20.
As a potential investor, those factors make me shy away from these investments as it makes the stock more volatile to changes and puts the fate of the stock in a few large holders hands.
Good, you're being smart about it. Not everyone will be, there will be a number of people who say "Gee, Twitter is everywhere this is going to be a huge stock some day." and will jump in with both feet. Betting with their feelings rather than an analysis of the fundamentals. For someone to 'win big' you either need someone to 'lose big' or a lot of people to 'lose somewhat.' Once there is enough float for the market to balance out the real expectation of the company will emerge (positive or negative).
As a potential investor I think buying it at $10 is probably reasonable and re-selling when it gets back to $20.
I don't think many companies see volatility as a good thing. Market makers, yes. Analysts, maybe. But companies and officers?
There is certainly a psychological sweet-spot for IPO pricing, between $10 and $20 a share. You've seen recent IPOs do reverse splits before going public -- Yelp did a 1:4, Trulia a 1:3, etc -- in order to arrive at an offering price in this range.
I don't think it needs to be any more complicated than that?
There is certainly a psychological sweet-spot for IPO pricing, between $10 and $20 a share. You've seen recent IPOs do reverse splits before going public -- Yelp did a 1:4, Trulia a 1:3, etc -- in order to arrive at an offering price in this range.
I don't think it needs to be any more complicated than that?
This is because all that the insiders need is to make their private shares public, i.e. liquid (notwithstanding officer's planned sales/insider restrictions). Potential liquidity of the insider's shares is the primary objective of a modern internet IPO, like Twitter's.
I respectfully disagree. At a company like Twitter, the so-called "insiders" have been able to take plenty of money off the table. And in fact, I'm not totally sure what share (if any) of the offering is from shares held by officers and investors. Have you seen the data?
Moreover, there is liquidity on the secondary market for Twitter like there was for FB, etc.
I think the primary object here is to raise capital and lubricate M&A activity. And most companies have no secondary market, so an IPO really helps unlock value for the rank-and-file who aren't part of the Series-XYZ rounds. There are a lot of engineers and middle managers there who will be able to buy homes and lots of other nice toys not to mention diversify their net worth a little.
Moreover, there is liquidity on the secondary market for Twitter like there was for FB, etc.
I think the primary object here is to raise capital and lubricate M&A activity. And most companies have no secondary market, so an IPO really helps unlock value for the rank-and-file who aren't part of the Series-XYZ rounds. There are a lot of engineers and middle managers there who will be able to buy homes and lots of other nice toys not to mention diversify their net worth a little.
RSU grants given to employees (including large grants given to new executives and key employees) are typically illiquid until 6 months following an IPO. The company has to IPO to make good on the compensation given to hire and retain their employees. If they never go public, employee compensation is worthless, and they cannot hire nor retain the best people.
Most often pre-IPO companies grant options not RSUs. And the lock-up period is a post IPO lockup designed to stabilize the price of a newly offered security while it finds its market.
The existence of a lock up period does not inhibit pre-ipo trading on the secondary market, though to be clear there is no truly liquid "secondary market" for most companies.
The existence of a lock up period does not inhibit pre-ipo trading on the secondary market, though to be clear there is no truly liquid "secondary market" for most companies.
It may also be the case that Twitter doesn't need to raise more money.
You could take it as another sign that the bubble is ending. If a company like twitter needs to do this to get valuation ...
Unless I am reading the prospectus wrong, looks like they haven't made a profit yet and the losses are much larger this year than last. I find that troubling for a software company wanting to IPO.
Neither Amazon nor Groupon were profitable at IPO, ostensibly because they were maximizing growth. I guess you just have to decide which you think Twitter is more like.
True, but Amazon could easily be profitable. It is a matter of choice in their case and has been that way since the beginning if my memory serves. Jeff Bezos chooses to run the company more like a non-profit than a C-corp. On the other hand, Groupon never had a sustainable business model.
Twitter seems like they could have a sustainable business model which is good, but I haven't seen much proof so far. When Facebook was not profitable for so many years, it was fairly obvious to me they had a path to profitability or sustainability (if they chose to act like Amazon). It is not obvious to me how Twitter will do this.
Twitter seems like they could have a sustainable business model which is good, but I haven't seen much proof so far. When Facebook was not profitable for so many years, it was fairly obvious to me they had a path to profitability or sustainability (if they chose to act like Amazon). It is not obvious to me how Twitter will do this.
This is probably a silly question - but can regular people buy Twitter stock as soon as trading begins?
I am thinking of buying a very small number of shares & "gifting" them to my sister - a super user of their service..more for novelty than as part of any serious investment strategy.
I am thinking of buying a very small number of shares & "gifting" them to my sister - a super user of their service..more for novelty than as part of any serious investment strategy.
Of course, but you won't know what the price will be until the shares start trading. If there is a lot of demand, they could be priced higher than the offer price.
Doubtful that you'd get it at the IPO price.
$11B seems like a low valuation. Groupon is still worth $6B and I don't think its anywhere near half as valuable as twitter. Twitter does have a problem trying to monetize the core business, the only way seems to be to charge celebrities and businesses to send out tweets(advertisements) but that will probably hurt them a lot.
But with all that data and all those users and celebrities there is so much possibility and directions it can go. If I owned them the front page would be all entertainment news, hire bloggers to scan through tweets and write stories about the latest gossip. Why let tmz and other entertainment news get all the ad revenue by writing about the info coming directly out of your site, twitter should be the #1 webpage for celebrity news/gossip. The kind of people who really use twitter are obsessed with this garbage, it seems only natural.
But with all that data and all those users and celebrities there is so much possibility and directions it can go. If I owned them the front page would be all entertainment news, hire bloggers to scan through tweets and write stories about the latest gossip. Why let tmz and other entertainment news get all the ad revenue by writing about the info coming directly out of your site, twitter should be the #1 webpage for celebrity news/gossip. The kind of people who really use twitter are obsessed with this garbage, it seems only natural.
They may have been advised to be a bit more conservative, given how FB IPO went
Well… the FB IPO went great for existing (vested) stockholders.
If your stock doubles immediately after going public, you just lost a ton of money and were probably grifted by your market-maker.
If your stock doubles immediately after going public, you just lost a ton of money and were probably grifted by your market-maker.
For famous companies that are already in the public mind I have no idea why they go the traditional IPO route (I'm not sure what SEC/market regulations require). Why not something like offer 10k shares at a $100B valuation see if anyone bites? Then go to $90B, and so on until you sell your entire offering. There is so much dead money out there that would buy $20 shares of twitter for any insane valuation and they are just leaving it on the table.
Google tried something similar with the reverse dutch auction
FB's high valuation looks negative to most people and that hurts FB's public image and FB is constantly under financial pressure to produce better result. Starting low is a good thing.
It's interesting that Biz Stone, the face of Twitter for a few years, isn't listed on the prospectus as a large shareholder.
He sold most of his stock when he left a few years ago, and owns about a tenth of one percent of the company now.
http://nymag.com/daily/intelligencer/2013/10/where-is-biz-st...
http://nymag.com/daily/intelligencer/2013/10/where-is-biz-st...
What is twitter going to do with $1.4B? Do they have some incredibly expensive investments planned?
Companies offer stock as an investment opportunity to raise capitol. Right?
Companies offer stock as an investment opportunity to raise capitol. Right?
That's one reason. Another reason is to provide liquidity to shareholders.
I think the main reason they are IPOing is that investors are done investing in the company. At that point, they have two options: Go public, or go out of business. IPO shifts the risk off of the VC's and onto everyones retirement/investment portfolios.
Anyone planning on buying Twitter for around the IPO price?
Don't buy it during the initial hype. Wait it out. My 2 cents.
Was expecting more like $8-$12 not this high.
I don't see any sign that anyone is selling stock... these numbers are all consistent with 13% dilution due to Twitter issuing new stock.