

Twitter Prices IPO Above Estimates at $26 Per Share, Valuation Up to $18B - McKittrick
http://techcrunch.com/2013/11/06/twitter-prices-ipo-at-26-per-share/

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danhak
It really baffles me why the share price is reported as if it means anything
at all on its own.

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pbreit
What? It means a lot, starting with how much money twitter will raise. Then it
suggests a rough valuation (at usually a modest discount) to what
institutional investors think the company is worth.

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cdash
His point is price means nothing except in the context of how many shares
there are, but yet the amount of shares is never talked about only the price.
200 shares at 100 dollars means nothing but 1 million shares at 100 dollars
means much more.

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pbreit
Well, since we already knew the number of shares, the comment made little
sense to me.

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downandout
An $18 billion valuation for a company with dramatically accelerating losses,
currently at the rate of over $20M per month. What could possibly go wrong
there?

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cylinder
Valued the same as Tesla. Is there anyone here who would rather own Twitter
instead of Tesla five years from now?

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downandout
Personally, I would shy away from both of them. If you really want to be in
one of these companies, at least Facebook has earnings and scale. I've never
liked twitter and get no value out of it, so perhaps I'm the wrong guy to ask,
but I suspect Twitter is headed the way of MySpace.

~~~
dj_axl
> Twitter is headed the way of MySpace

Possibly. Once Instagram's number of users (150 million) hits Twitter's number
of users (232 million) it won't be looking so good for Twitter, if Instagram
continues to grow. Maybe Twitter will take over SnapChat (26 million users)
though. Twitter just isn't gaining, they seem pretty stagnant, taking over a
younger company could give them some growth.

~~~
downandout
The comparison to Instagram is interesting. I used to do some marketing on
Vine. Our traffic from Vine dropped more than 90% in less than 1 week after
Instagram introduced video. That's how fast a replacement for Twitter could
gobble up its business as well. IMO, Twitter is better suited as a feature,
not a product, and definitely not an $18 billion company.

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aaronbrethorst
In case you're curious, the lockup expiration will happen 180 days after IPO,
or May 6, 2014. I already added a note to my calendar.

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MichaelGG
What are you expecting at that point? FB's major lockup expiration (Nov 14
2012) was preceded by a dip a few days prior (not the lowest price in the
previous few weeks though) and then went up on the lockup date.

Are you expecting a similar drop as news articles go out about the pending
lockup a week/days before, followed by it going up after some people realise
everyone knew about this all along?

~~~
aaronbrethorst
FB had three lockup expirations and the first two caused dips.

And, essentially, yes. Most lockup expirations, in my experience, seem cause a
meaningful dip in the company's stock price. This happened with Zillow a
couple years ago, it just happened to Tableau last week, and it happened twice
to FB, and those are just the examples I can think of off the top of my head.

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ahsanhilal
Twitter 2007: Who wants to post status messages which are limited to 140
characters

Twitter 2010: Who wants to invest in a company which limits status messages to
140 characters

Twitter 2013: Who thinks $26/share is a viable price for a company which
limits what people say to 140 characters, has no photo albums, events and all
of facebook's features (hint: Twitter is not Facebook)

~~~
corford
That's all fine and dandy but the proof of the pudding lies in a successful
monetization strategy. From where I'm sitting, I just can't see how they're
ever going to convince enough people to pony up (directly or indirectly) for
what is, at its core, an artificially constrained public sms service (that
thus far they've been accustomed to using for free).

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jessedhillon
What? People already pay to advertise on the service, the convincing is
happening right now.

~~~
corford
In a sane world I don't think there will be enough of them to stem the losses
and deliver a solid return on an IPO that values the company in the double
digit billions. Happy to be wrong but only time will tell.

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encoderer
The market conditions this past week or so have been rough on tech stocks. I'm
sure it's not what Twitter management would consider ideal, but pulling an IPO
is a very drastic move. As is, anything could happen tomorrow.

~~~
afterburner
Maybe all the tech stock fans are cashing out in preparation to sink it all
into Twitter...

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encoderer
Ok, maybe? But do you really think that's what's happening? More likely, I
think a generally underwhelming earnings season has deflated a few of these
momo stocks.

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afterburner
I actually do suspect that's what's happening, yes.

~~~
encoderer
I think that's a little naive. The market cap of twitter does not make up for
the losses in tech over the last 2-3 weeks. And that's as-if there is no new
money in the game, that to buy one stock you have to sell the rest. Which
means paying taxes. Not for macro reasons but JUST to buy a new offering?

Twitter is not the only big IPO. There is no pattern of market turndown in the
lead up to an IPO. The whole idea is a bit silly to me.

~~~
afterburner
2-3 weeks? I was thinking just the day or two before actually, and only the
handful of really popular tech stocks. Thanks for your patronizing put down
though.

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AsymetricCom
I'm anticipating a fall to the more realistic $14 immediately after open,
similar to FB.

What I'm actually doing is something completely illogical.

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recuter
Yep, time after time I carefully plot out a short and don't have the balls to
go through with it. I've lost millions on paper at this point. :) Sigh. :(

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tansey
You can't short an IPO...

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sarreph
Not _immediately_ , but you could probably find an entity to borrow them off,
pretty quickly.

I wouldn't have thought it would affect the overall shorting effect too much
either.

[http://www.investopedia.com/ask/answers/05/062905.asp](http://www.investopedia.com/ask/answers/05/062905.asp)

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hippy11
Twitter IPOs at $26/share with 700 million shares. Facebook ipo'ed at
$38/share with 2.55 billion shares. Mathematically, Twitter's IPO is about 1/4
the value of Facebook.

Twitter has 200 million active users Facebook has 1.15 billion active users

I don't think twitter is worth 1/5 the market cap of Facebook. It doesn't have
photo albums, groups, calendars, events that facebook does, and twitter still
has a long way to go for mobile. Most of my friends uses a third party tweet
client (like tweetbot) and don't even have twitter's app installed.

Therefore, I think Twitter is very much overpriced. Did I miss something?

[https://blog.twitter.com/2013/celebrating-
twitter7](https://blog.twitter.com/2013/celebrating-twitter7)
[http://thenextweb.com/facebook/2013/07/24/facebook-
users-q2-...](http://thenextweb.com/facebook/2013/07/24/facebook-
users-q2-2013/)

~~~
tobyjsullivan
It would be better to consider Facebook's monthly active users at the time of
their IPO.

The breakdown looks more like this:

Facebook at IPO: MAU: $845M [1], Valuation: $104B [1], Value/User = $123

Facebook Today: MAU: 1.15B [2], Valuation: $120B [3], Value/User = $104

Twitter at IPO: MAU: 218M [4], Valuation: $18.1B [5], Value/User = $83

[1]
[http://en.wikipedia.org/wiki/Initial_public_offering_of_Face...](http://en.wikipedia.org/wiki/Initial_public_offering_of_Facebook)

[2] [http://thenextweb.com/facebook/2013/07/24/facebook-
users-q2-...](http://thenextweb.com/facebook/2013/07/24/facebook-
users-q2-2013/)

[3]
[https://www.google.ca/finance?q=NASDAQ:FB](https://www.google.ca/finance?q=NASDAQ:FB)

[4]
[http://techcrunch.com/2013/10/03/blindtweeting/](http://techcrunch.com/2013/10/03/blindtweeting/)

[5] [http://techcrunch.com/2013/11/06/twitter-prices-ipo-
at-26-pe...](http://techcrunch.com/2013/11/06/twitter-prices-ipo-at-26-per-
share/)

~~~
AsymetricCom
Wallstreet is insane if it thinks Twitter is making $80 a user in the lifetime
of the company.

