News / Economy

Experts Say Leave Twitter IPO to Professionals

Experts Say Leave Twitter IPO to Professionalsi
X
November 06, 2013 12:02 AM
Another social media giant is going public. Twitter, the online micro-blogging service, launches its initial public offering (IPO) of stock on the New York Stock Exchange Thursday. Interest in owning a slice of the popular social networking site has been high - helping to boost share prices nearly 25 percent higher ahead of its launch. But should you buy into the hype? Mil Arcega spoke with experts and tells us what you need to know.
Another social media giant is going public. Twitter, the online micro-blogging service, launches its initial public offering (IPO) of stock on the New York Stock Exchange Thursday.  Interest in owning a slice of the popular social networking site has been high - helping to boost share prices nearly 25 percent higher ahead of its launch.  But should you buy into the hype?

It’s the biggest technology IPO since Facebook.  And if all goes as planned, Twitter could sell as many as 80 million shares priced between $23 to $25 apiece.  That would generate about $2 billion, giving Twitter a market value of $14 billion. But is it really worth it?   

Professor Aswath Damodaran at the Stern School of Business in New York says the numbers are just a starting point - based on what bankers think investors are willing to pay.  

He spoke with VOA via Skype.

“They’re pricing Twitter based on what Facebook is trading for, and Linked-in is trading for.  They’re not valuing the company.  To value the company you’ve got to go back to basics:   What are the revenues, what are the margins, what are the profits?  I personally think from a valuation perspective that 23 to 25 is too high," said Damodaran.

Damodaran says that doesn’t mean investors won't make money.  But unless you’re willing to monitor stock prices daily, he advises  amateur investors to stay away.  

“I’d say wait for Twitter to settle down.  The first year or two after a company goes public, it’s really going to go through waves of momentum that are very difficult to forecast. So you have to make a decision whether you’re a trader or an investor," he said.

Part of the problem is that Twitter has yet to prove it can make a profit.  And despite its large user base, it still lags behind other social networks, says market analyst Nate Elliott.

"According to our survey data, less than one-fourth of U.S. online users go to Twitter every month. It's not a bad number, but it's far behind what Facebook claims as active users in the U.S.," said Elliott.

The challenge for Twitter is not just how it expands but how it generates enough advertising revenue - without driving away 230 million users worldwide.

Whether Twitter can do that remains to be seen.  

Facebook, which made its public debut amid intense hype last year, lost nearly half its value in the first four months.  It’s now trading about 30 percent higher than when it first  launched.  Experts say Twitter could go through similar growing pains.  So before you buy, wait for the dust to settle.

You May Like

Video For West Ukraine City, Conflict Far Away Yet Near

Physically and culturally close to Western Europe, Lviv feels solidarity with compatriots in country’s east but says they need to decide own future More

West African Women Disproportionately Affected by Ebola

Women's roles in families and the community put them at greater risk for contracting the disease, officials say More

Video NASA's MAVEN Spacecraft Arrives at Mars

Mars Atmosphere and Volatile Evolution craft will measure rates at which gases escape Martian atmosphere into space More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
NASA’s MAVEN Probe Enters Mars Orbiti
X
September 22, 2014 9:20 PM
NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video NASA’s MAVEN Probe Enters Mars Orbit

NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video For West Ukraine City, Conflict Far Away Yet Near

The western Ukrainian city of Lviv prides itself on being both physically and culturally close to Western Europe. The Russian-backed separatists in the eastern part of the country are 1,200 kilometers away, and seemingly even farther away in their world view. Still, as VOA’s Al Pessin reports, the war is having an impact in Lviv.
Video

Video Saving Global Fish Stocks Starts in the Kitchen

With an estimated 90 percent of the world’s larger fish populations having already vanished, a growing number of people in the seafood industry are embracing the concept of sustainable fishing and farming practices. One American marine biologist turned restaurateur in Thailand is spreading the word among fellow chefs and customers. VOA Correspondent Steve Herman reports from Bangkok.
Video

Video Chinese Admiral Key in China’s Promotion of Sea Links

China’s President last week wrapped up landmark visits to India, Sri Lanka and Maldives, part of a broader campaign to promote a new “Maritime Silk Road” in Asia. The Chinese government’s promotion efforts rely heavily on the country’s best-known sailor, a 15th century eunuch named Zheng He. VOA's Bill Ide reports from the sailor’s hometown in Yunnan on the effort to promote China’s future by recalling its past.
Video

Video Experts Fear Ebola Outbreak ‘Beyond Our Capability to Contain’

Each day brings with it new warnings about the deadly Ebola outbreak already blamed for killing more than 2,600 people across West Africa. And while countries and international organizations like the United Nations are starting to come through on promises of help for those most affected, the unprecedented speed with which the virus has spread is raising questions about the international response. VOA's Jeff Seldin has more from Washington.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid

World Currencies

EUR
USD
0.7768
JPY
USD
108.84
GBP
USD
0.6124
CAD
USD
1.0999
INR
USD
61.042

Rates may not be current.