

Twitter to offer 70M shares priced at $17-$20 to raise up to $1.4B in IPO - coloneltcb
http://techcrunch.com/2013/10/24/twitter-to-offer-70m-shares-in-ipo-priced-at-17-20-per-share/

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cperciva
_Several of the company’s directors and executives are sharing stock. Chairman
Jack Dorsey is selling roughly .6 percent of the company and will own 4.3
percent after the offering — making his share worth around $434 million. Co-
founder Evan Williams is selling 1.6 percent of the company and will own 10.4
percent after the offering. Williams will be worth just over $1 billion if the
shares go at a median price of $18.50. CEO Dick Costolo will own 1.4 percent
of the company after IPO._

I don't see any sign that anyone is selling stock... these numbers are all
consistent with 13% dilution due to Twitter issuing new stock.

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jpmattia
It looks like TC didn't look at the table in the S-1 correctly:
[http://edgar.sec.gov/Archives/edgar/data/1418091/00011931251...](http://edgar.sec.gov/Archives/edgar/data/1418091/000119312513409822/d564001ds1a.htm)
(top of page 154)

That page + the "Several of the company’s directors and executives are
_sharing_ stock" (sharing? These are shared shares as opposed to all those
unshared shares) indicates not a lot of care went into the writeup.

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c2
It seems like the trend lately is to float a tiny amount of shares to the
public. From my perspective this creates an artificial supply problem for the
stock and makes higher valuations easier as you need less institutional buy in
to maintain the price, and a few good quarters can result in disproportionate
gains in the market.

Can anyone comment on that or shed some light? As a potential investor, those
factors make me shy away from these investments as it makes the stock more
volatile to changes and puts the fate of the stock in a few large holders
hands.

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cft
This is because all that the insiders need is to make their private shares
public, i.e. liquid (notwithstanding officer's planned sales/insider
restrictions). Potential liquidity of the insider's shares is the primary
objective of a modern internet IPO, like Twitter's.

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encoderer
I respectfully disagree. At a company like Twitter, the so-called "insiders"
have been able to take plenty of money off the table. And in fact, I'm not
totally sure what share (if any) of the offering is from shares held by
officers and investors. Have you seen the data?

Moreover, there is liquidity on the secondary market for Twitter like there
was for FB, etc.

I think the primary object here is to raise capital and lubricate M&A
activity. And most companies have no secondary market, so an IPO really helps
unlock value for the rank-and-file who aren't part of the Series-XYZ rounds.
There are a lot of engineers and middle managers there who will be able to buy
homes and lots of other nice toys not to mention diversify their net worth a
little.

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bcherry
RSU grants given to employees (including large grants given to new executives
and key employees) are typically illiquid until 6 months following an IPO. The
company has to IPO to make good on the compensation given to hire and retain
their employees. If they never go public, employee compensation is worthless,
and they cannot hire nor retain the best people.

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encoderer
Most often pre-IPO companies grant _options_ not RSUs. And the lock-up period
is a _post IPO_ lockup designed to stabilize the price of a newly offered
security while it finds its market.

The existence of a lock up period does not inhibit pre-ipo trading on the
secondary market, though to be clear there is no truly liquid "secondary
market" for most companies.

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rpedela
Unless I am reading the prospectus wrong, looks like they haven't made a
profit yet and the losses are much larger this year than last. I find that
troubling for a software company wanting to IPO.

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fizx
Neither Amazon nor Groupon were profitable at IPO, ostensibly because they
were maximizing growth. I guess you just have to decide which you think
Twitter is more like.

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rpedela
True, but Amazon could easily be profitable. It is a matter of choice in their
case and has been that way since the beginning if my memory serves. Jeff Bezos
chooses to run the company more like a non-profit than a C-corp. On the other
hand, Groupon never had a sustainable business model.

Twitter seems like they could have a sustainable business model which is good,
but I haven't seen much proof so far. When Facebook was not profitable for so
many years, it was fairly obvious to me they had a path to profitability or
sustainability (if they chose to act like Amazon). It is not obvious to me how
Twitter will do this.

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codex_irl
This is probably a silly question - but can regular people buy Twitter stock
as soon as trading begins?

I am thinking of buying a very small number of shares & "gifting" them to my
sister - a super user of their service..more for novelty than as part of any
serious investment strategy.

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cmbaus
Of course, but you won't know what the price will be until the shares start
trading. If there is a lot of demand, they could be priced higher than the
offer price.

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unabridged
$11B seems like a low valuation. Groupon is still worth $6B and I don't think
its anywhere near half as valuable as twitter. Twitter does have a problem
trying to monetize the core business, the only way seems to be to charge
celebrities and businesses to send out tweets(advertisements) but that will
probably hurt them a lot.

But with all that data and all those users and celebrities there is so much
possibility and directions it can go. If I owned them the front page would be
all entertainment news, hire bloggers to scan through tweets and write stories
about the latest gossip. Why let tmz and other entertainment news get all the
ad revenue by writing about the info coming directly out of your site, twitter
should be the #1 webpage for celebrity news/gossip. The kind of people who
really use twitter are obsessed with this garbage, it seems only natural.

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nonchalance
They may have been advised to be a bit more conservative, given how FB IPO
went

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phillmv
Well… the FB IPO went great for existing (vested) stockholders.

If your stock doubles immediately after going public, you just lost a ton of
money and were probably grifted by your market-maker.

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unabridged
For famous companies that are already in the public mind I have no idea why
they go the traditional IPO route (I'm not sure what SEC/market regulations
require). Why not something like offer 10k shares at a $100B valuation see if
anyone bites? Then go to $90B, and so on until you sell your entire offering.
There is so much dead money out there that would buy $20 shares of twitter for
any insane valuation and they are just leaving it on the table.

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nonchalance
Google tried something similar with the reverse dutch auction

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bluedevil2k
It's interesting that Biz Stone, the face of Twitter for a few years, isn't
listed on the prospectus as a large shareholder.

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gkoberger
He sold most of his stock when he left a few years ago, and owns about a tenth
of one percent of the company now.

[http://nymag.com/daily/intelligencer/2013/10/where-is-biz-
st...](http://nymag.com/daily/intelligencer/2013/10/where-is-biz-stone.html)

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sliverstorm
What is twitter going to do with $1.4B? Do they have some incredibly expensive
investments planned?

Companies offer stock as an investment opportunity to raise capitol. Right?

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danhak
That's one reason. Another reason is to provide liquidity to shareholders.

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6thSigma
Anyone planning on buying Twitter for around the IPO price?

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BaconJuice
Don't buy it during the initial hype. Wait it out. My 2 cents.

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knodi
Was expecting more like $8-$12 not this high.

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yeukhon
Average consumers like us can't buy stock right?

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theatrus2
The point of an IPO is to offer stock to the public. Once its on the market,
anyone can.

