News / Economy

    Twitter's 'Anti-Facebook' IPO Tactics Win Over Some Investors

    FILE - Twitter CEO Dick Costolo gestures during a conference at the Cannes Lions in Cannes, France, June 20, 2012. FILE - Twitter CEO Dick Costolo gestures during a conference at the Cannes Lions in Cannes, France, June 20, 2012.
    x
    FILE - Twitter CEO Dick Costolo gestures during a conference at the Cannes Lions in Cannes, France, June 20, 2012.
    FILE - Twitter CEO Dick Costolo gestures during a conference at the Cannes Lions in Cannes, France, June 20, 2012.
    Reuters
    Institutional investors who met with Twitter Inc this week say they are optimistic about its initial public offering and see little sign of the irrational exuberance that preceded Facebook Inc's splashy coming-out party in 2012.
     
    On Monday and Tuesday, Twitter Chief Executive Dick Costolo and Chief Financial Officer Mike Gupta met with large fund managers and analysts in New York and on the East Coast to sell them on an IPO that seeks to raise up to $1.6 billion for the loss-making social media company.
     
    Closely watched by Wall Street and Silicon Valley, Twitter's relatively conservative offering has differed from Facebook's $16 billion IPO in a panoply of ways, from its vastly smaller deal size to a decision to list on the New York Stock Exchange over Nasdaq.
     
    “It definitely was different than when (Facebook CEO Mark) Zuckerberg came through ... It's the right kind of buzz,” said one fund manager who met with Twitter on Monday.
     
    “With Facebook, the buzz was just stupid,” said the manager, who declined to be identified because he was not authorized to speak to the media.
     
    Twitter last week said that it would price its IPO shares at $17 to $20 a piece, valuing the online messaging company at up to about $11 billion. That is less than the $15 billion that analysts had expected, and far below the $100 billion valuation that Facebook received in its IPO last May.
     
    However, Facebook had reported an annual profit of $1 billion and revenue of $3.7 billion before it went public, whereas Twitter reported a net loss of $79.4 million on revenue of just $316.9 million in 2012.
     
    At the upper end of its IPO price range, Twitter would be valuing itself at 20 times trailing 12-month sales currently, and about 17  times at the lower end, according to Reuters' calculations from Twitter's IPO filings. But its outstanding share base could swell by tens of millions of stock as holders exercise options and restricted stock units, inflating the valuation.
     
    In comparison, Facebook trades at about 24 times trailing 12-month sales and LinkedIn Corp at roughly 30 times.
     
    And yet....
     
    Fund managers viewed Twitter's price range as relatively conservative, basing their perspective on earlier guesses that had pegged the company's range as $28 to $30. Twitter itself mentioned that it had internally valued its own stock at $20.62 as recently as in September.
     
    That has attracted some investors who expect Twitter's shares to climb after they begin trading on the New York Stock Exchange on Nov. 7.
     
    Twitter “is getting a really warm welcome from people,” said Scott Sweet, CEO of research firm IPO Boutique.
     
    “Of all the individuals and institutions I've talked to - which include multi-billion dollar hedge funds - no one has said they aren't playing,” Sweet said.
     
    Facebook's float was marred by an 11 percent drop in the stock on its second day of trade and successive declines over the next few months as investors questioned the company's ability to grow revenue through mobile devices.
     
    It didn't help that, before its debut, Facebook's underwriters raised the size of the IPO by 25 percent and also hiked the price range. Finally, technical problems with Nasdaq trading systems delayed the start of trade, sowing confusion amongst nervous traders.
     
    It took over a year for Facebook shares to reclaim their IPO price.
     
    Another investor, who owns shares in Facebook and LinkedIn said his firm is approaching all the Twitter underwriters to ask for a 10 percent allocation, with the hopes of getting between 1.5 to 3 percent.
     
    “It's a stupid game that is played ... if you can get what you want, then you don't want it,” he said.
     
    Some investors say they believe management has learned from Facebook's mistakes and are pricing the deal in a more conservative manner.
     
    “It's the anti-Facebook” said a second fund manager, who also spoke on condition of anonymity and is planning on meeting with management later this week.
     
    Twitter will hold its first large investor lunch in New York on Wednesday, and investor interest is expected to build as the roadshow proceeds. After stops in Boston, Chicago, San Francisco, Los Angeles and Denver, the roadshow ends in New York next week with pricing scheduled for Nov. 6 and trading on the New York Stock Exchange to commence a day later under the ticker symbol “TWTR.”
     
    The company founders “are gazillionaires already. I think they're not going to want to spend the year after the IPO dominated by the argument about 'why we the IPO,”' the second fund manager said. “Life is short.”

    You May Like

    Hope Remains for Rio Olympic Games

    Facing a host of problems, Rio prepares for holding the games but experts say some risks, like Zika, may not be as grave as initially thought

    IS Use of Social Media to Recruit, Radicalize Still a Top Threat to US

    Despite military gains against IS in Iraq and Syria, their internet propaganda still commands an audience; US officials see 'the most complex challenge that the federal government and industry face'

    ‘Time Is Now’ to Save Africa’s Animals From Poachers, Activist Says

    During Zimbabwe visit, African Wildlife Foundation President Kaddu Sebunya says poaching hurts Africa as slave trade once did

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Ivorian Chocolate Makers Promote Locally-made Chocolatei
    X
    July 29, 2016 4:02 PM
    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100 percent Ivorian chocolate bar at a time.
    Video

    Video Ivorian Chocolate Makers Promote Locally-made Chocolate

    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100 percent Ivorian chocolate bar at a time.
    Video

    Video Tesla Opens Battery-Producing Gigafactory

    Two years after starting to produce electric cars, U.S. car maker Tesla Motors has opened the first part of its huge battery manufacturing plant, which will eventually cover more than a square kilometer. Situated close to Reno, Nevada, the so-called Gigafactory will eventually produce more lithium-ion batteries than were made worldwide in 2013. VOA's George Putic reports.
    Video

    Video Polio-affected Afghan Student Fulfilling Her Dreams in America

    Afghanistan is one of only two countries in the world where children still get infected by polio. The other is Pakistan. Mahbooba Akhtarzada who is from Afghanistan, was disabled by polio, but has managed to overcome the obstacles caused by this crippling disease. VOA's Zheela Nasari caught up with Akhtarzada and brings us this report narrated by Bronwyn Benito.
    Video

    Video Hillary Clinton Promises to Build a 'Better Tomorrow'

    Democratic presidential candidate Hillary Clinton urged voters Thursday not to give in to the politics of fear. She vowed to unite the country and move it forward if elected in November. Clinton formally accepted the Democratic Party's nomination at its national convention in Philadelphia. VOA national correspondent Jim Malone has more.
    Video

    Video Trump Tones Down Praise for Russia

    Republican presidential candidate Donald Trump is toning down his compliments for Russia and Vladimir Putin as such rhetoric got him in trouble recently. After calling on Russia to find 30.000 missing emails from rival Hillary Clinton, Trump told reporters he doesn't know Putin and never called him a great leader, just one who's better than President Barack Obama. Putin has welcomed Trump's overtures, but, as Zlatica Hoke reports, ordinary Russians say they are not putting much faith in Trump.
    Video

    Video Uganda Unveils its First Solar-powered Bus

    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Silicon Valley: More Than A Place, It's a Culture

    Silicon Valley is a technology powerhouse and a place that companies such as Google, Facebook and Apple call home. It is a region in northern California that stretches from San Francisco to San Jose. But, more than that, it's known for its startup culture. VOA's Elizabeth Lee went inside one company to find out what it's like to work in a startup.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8998
    JPY
    USD
    103.32
    GBP
    USD
    0.7594
    CAD
    USD
    1.3176
    INR
    USD
    66.954

    Rates may not be current.