

Twitter Flies On Its First Day: Shares Pop 74% On First Trades, $31.8B Valuation - siculars
http://techcrunch.com/2013/11/07/twitter-nyse-day-1/

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skizm
I'm sorry, newbie to stocks, trading, etc here. Can someone explain how they
IPOed at 26 dollars but somehow opened today at $45.10? Isn't today the first
time people can buy stock? Why did they not open at their IPO price? I guess I
don't understand exactly what an IPO entails.

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dragontamer
Twitter does not sell directly on the exchanges. Instead, various big banks
have purchased "first dibs" on the stock directly from Twitter. _THEIR_ price
was $26 a share.

Now before you call this "unfair", remember that Facebook's IPO went downwards
rather quickly, and is considered to be a failure. Banks definitely lost money
by participating in Facebook's IPO, which IPOed at $38 and then fell to $20
for months.

Its too early to call Twitter's IPO a success btw. Lets wait for a week, and
see where the stock ends up. IPOs are extremely volatile.

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astrodust
Remember what's a "failure" for banks is a "win" for people like Zuckerberg.

Having a giant pop like this means you've left a _lot_ of money on the table.
If people were willing to pay $45 for Twitter shares and you sold them for
$26, then you got ripped off.

The ideal IPO price is one that doesn't rise or sink, meaning you nailed it.

~~~
dragontamer
Precisely. If Twitter IPOed at $40, they'd have $2.7 Billion instead of $1.8
Billion. Since Twitter set the bar too low, they're missing out on almost a
billion in hard cash right now.

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valvoja
Wow. I've never seen a remotely interesting sponsored tweet so I'm surprised
if advertising was an effective way forward for them.

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potatolicious
The proof is in the pudding - we've had solid success with Twitter
advertising, to the point where the leads coming from them are higher-
converting or higher-quality-after-convert than some other, more expensive
sources.

As a Twitter non-user I don't get it either. But hey, the results don't lie.

~~~
valvoja
Very interesting. Would you mind sharing which vertical/industry you are in?
Do you think your success is because competition is currently low or because
you can do something clever in targeting the ads?

The way I see it Twitter is either a broadcast channel for people who want to
share lots of self-important things or a stalking channel where people can
follow celebrities etc. Eithe way I don't see people buying stuff unless it is
celebrity endorsed.

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Mikeb85
Damn, wish it were easier to get IPO shares as a retail investor... (then
again Facebook fell on its face out of the gate, hard to gauge whether an IPO
will have a huge pop on its first trading day).

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nanidin
Isn't the supposed purpose of an investment bank to properly value the company
so that these massive IPO pops don't happen?

The fact that they happen at all means the banks are not good at what they do,
or they do it on purpose so they can distribute wealth to their desired
parties.

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Mikeb85
Ideally, yes. But they do undervalue so that there's more incentive for IPO
investors to buy in. Value it too high, IPO investors won't bite, and the firm
won't raise as much capital as they want.

The real story is that Twitter raised 1.8 billion in cash, the market is just
a side-show.

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krakensden
Doesn't the fact that it popped $20 per share mean that they screwed up the
price, and left money on the table from the initial chunk of stock sold?

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dragontamer
Not necessarily. Only if the share price remains this high for the next month
or so.

All shares "pop up" on the first day or so. The question is if investors are
willing to continue to buy the stock at that rate.

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fr0sty
> All shares "pop up" on the first day or so.

Unless the ticker is "FB"...

