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Twitter Going to the NYSE, Casual Investors Odds Slim for Big, Immediate Profits

By  +Follow October 16, 2013 9:06AM
Tickers Mentioned:

In filings with the Securities and Exchange Commission on Tuesday, Twitter, Inc. said that it is taking its initial public offering to the New York Stock Exchange, rather than the Nasdaq (NDAQ) exchange, dealing a blow to the smaller exchange that hoped to win its favor.  The social media company intends to list under the ticker “TWTR” with its reported  $1.0 billion to $1.5 billion IPO.  The exchange choice has to make one wonder if the decision had anything to do with the debacle of the heavily anticipated IPO for Facebook (FB) in May 2012.

The abridged version of the Facebook price story goes like this:  The IPO price was first expected at a low end of $25 per share, which eventually was set at $38 per share on huge investor appetite.  Shares gapped up to start trading at $42 and ran to about $45 on the IPO day mired in chaos (delay to the of opening trading and other trading disruptions as Nasdaq’s system couldn’t handle the volume) before closing back near the $38 mark.  In subsequent months, shares plunged to a low of $17.55 on a bloated valuation, insider selling, dilution and analysts bashing the company for a lack of a plan to monetize its mobile business.  In Facebook’s defense, just over a year later, the stock has hit all-time highs.

No date has been disclosed for the Twitter debut, but most analysts are under the assumption that it will be by the end of the year with an initial price around $29 per share.  People close to the source, who wish not to be identified, according to the NY Times, say that the IPO will be priced on November 14 with trading starting the next day.

Facebook’s initial prospectus showed 845 million active monthly users.  The recent SEC filing from Twitter shows that, quarter-over-quarter, monthly active users at Twitter rose to more than 230 million from 215 million for the three months ended September 30.

Regulatory filings also showed that Twitter expanded revenue and net loss during the third quarter.  Revenue increased to $168.6 million, versus only $82.3 million in the same quarter last year.  While many might extrapolate doubling sales as a great thing for the company, it’s hard to overlook that net losses grew even more, proportionately speaking, increasing from $21.6 million to $64.6 million, as the company spent more on stock-based compensation and research and development.

Advertising revenue jumped 39 percent from the June period to $153.4 million.

Twitter is expected to hit the road this month peddling its offering to try and get institutional investors to sink cash into their business model, which now includes partnerships with Comcast ($CMSCA) as the future of a combination of social media and mobile content.

The question there is:  Will Wall Street overlook a tripling net loss to get a piece of the social media pie?  The answer is:  Yes.  In fact, to many, the losses will mean that Twitter is working to reach the type of scale that institutional investors will want to see.

Wall Street is – I dare say – blind to running IPOs anymore.  It seems safe to say that if soup and sandwich restaurant operator Potbelly (PBPB) gapped up more than 100 percent in its debut on the Nasdaq, that Twitter’s crazily-anticipated IPO may gap heavily beyond its IPO price, so average retail investors shouldn’t hold their breath to ever see $29 or $30 per share.  Potbelly priced its offering at $14 per share and gapped to about $30 per share at its opening of trading, representing one of the best performing IPOs this year.  Of course, casual retail investors never saw that opportunity at $14 and now the stock is down, closing Tuesday at $25.68 after hitting as low as $23.78 as initial investors apparently booked profits.

Bottom line is that this doesn’t appear to be another Facebook as Twitter seems actively trying to avert falling into that social media and initial investing chasm that Facebook did as the markets are chomping at the bit for Twitter to go public.  The original investors are going to (rightfully so) make a killing on their investment and the institutions behind it are going to push like crazy to get their following investment community to buy into it.  To the average person sitting behind a keyboard on IPO day:  Good luck because most of these types of deals generally require a really quick finger to bank a small profit if/when the stock price gaps way ahead at the start of trading as it seems likely TWTR will do.  Taking a “glass is half full” attitude, maybe the price will gap and continue to run, at least providing an opportunity for casual traders.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

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Results for FB
Francene Vitale
26 Nov 14 09:48:10
#Stocks to hold onto $WIN $VVC $MCD $FB Try this http://t.co/Qrd9Msv0Ty
A. Maceroni
26 Nov 14 09:47:50
$FB looking great above daily 50MA
Ravi Romo
26 Nov 14 09:47:19
Facebook Is Making New Privacy Changes Starting Next Year http://t.co/xzF4jys49R via @TheStreet $FB
Bodhi Thatcher
26 Nov 14 09:46:23
Would you like great research on stocks $HOT $CXW $HSH $FB #newsletter http://t.co/B9Jobu8vXs
1 Up Wall Street
26 Nov 14 09:46:19
@CNBCSocial $FB #acquisitions in past 10 months has an #NAV of more than $7 billion per year in #revenue. http://t.co/VhbUNOJiYj
26 Nov 14 09:46:18
SUPN Stock Chart $SUPN $XLV $RIG $FB http://t.co/1UV0vYLir5 http://t.co/TrF5WN23ld
26 Nov 14 09:46:01
Top 4 Signs the Stock is a Scam http://t.co/ttcBMorB08 #stocks #trading $FB $GPRO $LNKD http://t.co/EQ1UjoeDUn
26 Nov 14 09:45:59
"@Mega_Yacht: $TWTR strategy = BTFD: buy(B)utton, (T)weets, (F)abric, (D)igits + Data mining. $FB $GOOG $LNKD $AMZN $BABA $YELP $AAPL $IBM"
Jea Yu
26 Nov 14 09:45:59
$FB covered some more shorts at 77.12, out + .41 into the FLUSH... don't forget to wipe!
Carolina Keeling
26 Nov 14 09:45:45
Find more winners like $FB $CIM $DRC $TSLA View now http://t.co/bxi4EWLxnP
26 Nov 14 09:45:24
$FB finally pulls back. It didn't touch $70, at all$TWTR is on my radar.
Ravi Romo
26 Nov 14 09:45:10
Outside Voices: Facebook’s New Algorithm is More of the Same (and that’s OK) http://t.co/8O6osXfHd1 via @WSJ $FB
Carolyn B Miciano
26 Nov 14 09:44:22
Why Technical analysis is critical in trading http://t.co/G2IESVM02G $AMZN $FB $TWTR
Dana Mcginnis
26 Nov 14 09:44:20
#Stocks you might want to buy $CYT $RHT $MET $FB I suggest http://t.co/gIKTz1MpGx
Clark Mccray
26 Nov 14 09:43:05
Seeking the next stock like $MUR $VNTA $INGR $FB #NSE http://t.co/vlKgwOV0of
Lauren Holmes
26 Nov 14 09:41:06
We track portfolio managers moves and recommends best trades at http://t.co/VrsGMCgPOC $AAPL $ORCL $FB
Sabine Bumgarner
26 Nov 14 09:40:49
$UNT Stocks to Watch this week $LKQ $MD $FB #newsletter http://t.co/NeKoOyG2cI
26 Nov 14 09:39:26
RT @OptionsHawk: $FB trading 187,000 calls < 3 hours in, more than daily avg., and on a slow day <--187K?
Melis ಇ
26 Nov 14 09:37:25
In 2005, MySpace was in talks to buy Facebook, but rejected Mark Zuckerberg's asking price of $75 million as too expensive. $FB
26 Nov 14 09:37:04
Facebook Through The Lens Of Porter's Five Forces http://t.co/NEaa8lvCCB by Trefis Team $FB $TWTR $GOOGL
26 Nov 14 09:36:56
@ChrisRBivins I'm still very long on $FB
Melis ಇ
26 Nov 14 09:36:44
829 million people used Facebook every day last quarter. That's 14% of the world's population. $FB
26 Nov 14 09:36:42
RT @CBOE_TV: $KSS black Friday, $HPQ & $SDRL earnings, $MYL. Interview w @TDAJJKinahan $LULU holiday play, $FB Jan trades, $WAG IV http://t…
26 Nov 14 09:36:39
$FB had a strong day yesterday, it appears the 72.51 low from last week may hold, would like to see a break and hold of 76.00 on good volume
Jea Yu
26 Nov 14 09:36:33
$FB chart on reversion set-up short on strong $SPY, trail 77.63 for 77.13-76.90 downside http://t.co/1uZMeDjYdv
Common Sense Capital
26 Nov 14 09:35:23
RT @aztecs99: we've been buying this in the chat room for 2 days now! @vivekBWT: @aztecs99 Any thoughts on $FB?
26 Nov 14 09:33:49
RT @GoogleFacts: 829 million people used Facebook every day last quarter. That's 14% of the world's population. $FB
Jawaid Rasool
26 Nov 14 09:32:50
RT @GoogleFacts: 829 million people used Facebook every day last quarter. That's 14% of the world's population. $FB
Julissa Cato
26 Nov 14 09:31:59
Todays movers to research $LUV $DO $CTL $FB #personalfinance http://t.co/UyY7TTKzuO
Jea Yu
26 Nov 14 09:31:24
$FB trimmed some shorts 77.23, out + .30 nice panics on 5 min mini inverse pups
PennyStock Zone
26 Nov 14 09:31:16
http://t.co/fnBiu3MA1X <-- Awesome trading DVD featuring 3 profitly gurus! #stocks #trading #nyse $FB $TWTR $VSR $MAC $VZ $GS
Arielle Harter
26 Nov 14 09:30:34
$AGN Are you looking for winners like $DNKN $AMD $FB #overvalued http://t.co/YOyS4k39XF
Bob Lang
26 Nov 14 09:29:22
we've been buying this in the chat room for 2 days now! @vivekBWT: @aztecs99 Any thoughts on $FB?
Laquanda Farrow
26 Nov 14 09:28:30
Would you like great research on stocks $VLO $MSI $PBCT $FB #economy http://t.co/ODwdOwhy7v
26 Nov 14 09:28:21
$GOOG $GOOGL Contributor by Google could emerge as an alternative source of revenue (Video) $FB http://t.co/pYu35bDlVM
26 Nov 14 09:28:05
@VetTechTrader $gpro may be a better fit with $fb, so it can still command android & aapl OS, apps, etc, maintaining its brand & market lead
Jea Yu
26 Nov 14 09:27:44
$TWTR eroding,. $FB slipping again off $77.57 fib resistance..
Lanelle Fultz
26 Nov 14 09:26:58
Regretting your investment in $PPS $ONXX $CA $FB Must see http://t.co/xw1OHBCFsV
26 Nov 14 09:26:47
When $FB gets to $79-80 I'm buying some June 2015 $85 Puts.
26 Nov 14 09:26:30
@aztecs99 Any thoughts on $FB?
Cheyenne Ingalls
26 Nov 14 09:26:16
#Best #Pennystock research $FB $CA $WR $S Must see http://t.co/AyP53k0le7
26 Nov 14 09:26:13
$SLV any other opinions on this? $DDD $FB $BBRY $FSLR $ITB http://t.co/yMItW6vLBM
Albert Davies
26 Nov 14 09:25:47
Get Free research on $HAS $PKI $CNCA $FB Goto http://t.co/nHHbmKlbVh
26 Nov 14 09:25:47
i thought $fb gave weak ER and slowing growth and it added 2 billion today. man. if they had given good ER/guidance 120 by now lol.
26 Nov 14 09:23:30
$KSS black Friday, $HPQ & $SDRL earnings, $MYL. Interview w @TDAJJKinahan $LULU holiday play, $FB Jan trades, $WAG IV http://t.co/z87aUVBuxn
The Real Peter Coish
26 Nov 14 09:23:28
RT @GoogleFacts: 829 million people used Facebook every day last quarter. That's 14% of the world's population. $FB
Rusty Clements
26 Nov 14 09:22:48
Awesome #Stock #Research $MA $DHR $FNFG $FB Visit http://t.co/DgtX1Uo1hF
Dan Forman
26 Nov 14 09:22:20
$gpro ceo is a frat boy who has no problem being shady to his investors or profit taking from them. He's years behind on drones. $fb spacex
Andrew Grant
26 Nov 14 09:22:04
RT @OptionsHawk: $FB trading 187,000 calls < 3 hours in, more than daily avg., and on a slow day
Al Sabogal
26 Nov 14 09:21:47
RT @OptionsHawk: $FB trading 187,000 calls < 3 hours in, more than daily avg., and on a slow day
By  +Follow October 16, 2013 9:06AM



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