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

EU Court Fines Poland for Hosting CIA 'Black Sites'

Ruling is first time a court has acknowledged suspects were held and tortured at the sites, under US program launched following the 9/11 terrorist attacks More

Migrant Issues Close to Home Spur Groups to Take Action

Groups placing water, food in the desert, or aiding detainees after release, have one common goal: no more deaths of migrants crossing illegally into the US More

Video At AIDS Conference, Prevention Pill Stirs Excitement

Truveda shows promise, spurring debate over access and other approaches More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Treatment for Childhood Epilepsy Heats up Medical Marijuana Debatei
X
Shelley Schlender
July 24, 2014 6:43 PM
In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video Death Toll From Israel-Gaza Conflict Surpasses 700

Gaza officials say a shelling hit a compound housing a United Nations-run school in the Gaza Strip, killing more than a dozen people, during an Israeli offensive in the area. Heavy fighting between the Israeli military and Hamas militants continued on Thursday, pushing up the death toll. So far, more than 730 Palestinians and 35 Israelis have been killed in the conflict. VOA's Scott Bobb has the latest from Jerusalem.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
Video

Video Israel Targets Gaza Supply Tunnels

The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video Researchers Target Low-Cost Avatar Technology

Scientists at the University of Southern California Institute for Creative Technologies say 3-dimensional representations could revolutionize social media. Elizabeth Lee has more from Los Angeles.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.