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

UN Watchdog Urges Israel to Probe Possible Gaza War Crimes

More than 2,100 Palestinians, most of them civilians, were killed in a 51-day war in Gaza, along with 67 Israeli soldiers and six civilians in Israel More

New Kenyan 'Thin SIMs' Poised to Transform African Mobile Money

Equity's new technology is approved in African nation for one-year trial, though industry leader Safaricom says thin SIMs could lead to data theft and fraud More

Solar's Future Looks Brighter

New technology and dropping prices are contributing to a surge in solar power More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7893
JPY
USD
107.68
GBP
USD
0.6238
CAD
USD
1.1214
INR
USD
61.185

Rates may not be current.