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

By  +Follow October 16, 2013 9:06AM
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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
JOC
27 Aug 14 07:31:43
$ZPIN maybe people finally saw the numbers and see the growth potential here. $SD $FB $LNKD $MU $MYEC
DaveCAN-SLIM
27 Aug 14 07:31:41
The sales on $TWTR are more than doubling every year. $FB isn't doing that ! Doubling sales every year is not an easy thing to do! canslim
Dathan Pyle
27 Aug 14 07:31:03
Locked in some profits on $GILD and $FB
Winborn Traders
27 Aug 14 07:30:57
$ES_F EMINI SP500 Futures #TradingSignal #DayTrading Monthly Weekly & Daily Key Support Resistance Levels $SPY $SPX $AAPL #ES_F #ibroker $FB
Alejandro Jaime
27 Aug 14 07:30:41
long $FB at 74.83 stop at lows of the day
Winborn Traders
27 Aug 14 07:30:32
Watch #Emini $ES_F #DayTrading Training Videos http://t.co/On5DO8ZsR7 & imagine if you attend our $SPX $SPY $AAPL $FB #ES_F Live TradingRoom
Marshall Moore
27 Aug 14 07:30:28
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
buddy madison
27 Aug 14 07:30:10
RT @stockstobuy: $TWTR & $YELP are flat following big Facebook $FB stock downgrade
Taran Rai
27 Aug 14 07:30:04
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
Joe Crist
27 Aug 14 07:30:01
$fb...thank you Janney for the downgrade, allowed me to get my money back on the put options back and to break even!!!!!
Jeff Quiggle
27 Aug 14 07:29:42
$FB down just below top of 5-week box on "downgrade" after 1-day above #social http://t.co/gx7oyUvtej
StockExpert
27 Aug 14 07:29:26
$ISNS Volume OVER 10 Million on a Tiny 2 Million Share Float TONS OF SHORTS $spy $DIA $QQQ $TWTR $FB $LNKD $AAPL $GOOG $INTC $X $BAC $C $JPM
Stocks to Buy
27 Aug 14 07:29:18
$TWTR & $YELP are flat following big Facebook $FB stock downgrade
Winborn Traders
27 Aug 14 07:28:24
$ES_F $SPX $SPY $DJI $QQQ $YM_F $NQ_F $TF_F $FB did your Trade get Stopped Out because of The Market's noises? we can help you to avoid it!
Amigobulls
27 Aug 14 07:27:45
$TWTR $FB $LNKD A valuation comparison of the three social networks. http://t.co/XDeHh6jquq
Amigobulls
27 Aug 14 07:27:45
$GOOGL $TWTR $FB $LNKD WHich is the best social media stock for your portfolio? http://t.co/M47ulYURR1
Hitail'n
27 Aug 14 07:27:37
$FB revisit 74.38 by Fri.
Gilmo Report
27 Aug 14 07:26:54
The analyst who downgraded $FB actually commented that he sees more opportunity in $TWTR. Now that guy is smart! ;-)
Winborn Traders
27 Aug 14 07:26:12
Get Your 7-day Free Trial $ES_F Live Trading Room Visit http://t.co/Z6SZ3H2SeS $SPY $FB $NQ_F $SPX $YM_F $TSLA $NFLX $TWT $QQQ $DJI
Fred Twick
27 Aug 14 07:25:58
Anti-Twitter Facebook Bulls crack me the hell up. Much like the networks themselves, $TWTR caters high brow, while $FB caters to the low.
CNNMoney Investing
27 Aug 14 07:25:55
RT @MattMEgan5: #Stocks may be at records but $FB slips 1.5%. Wondering why? #Janney reportedly cut #Facebook to neutral on growth, valuati…
smtrader StockTrader
27 Aug 14 07:25:49
so far lot of stk are holding their LOD, now watching if these can take out their early HOD $AAPL $FB $TWTR
Matt Egan
27 Aug 14 07:25:39
#Stocks may be at records but $FB slips 1.5%. Wondering why? #Janney reportedly cut #Facebook to neutral on growth, valuation concerns
OptionsPlay
27 Aug 14 07:25:26
$FB has been in a bullish trend since 7/11. Support at $72 and resistance at $76.74 http://t.co/Ff84B9hXKP
TheOptionFox
27 Aug 14 07:25:09
We get $FB above 75 here and We can easily revisit HOD
Media Sentiment
27 Aug 14 07:24:47
$FB received a new alert. Find out why at http://t.co/5udYd0Ofs6 #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 186
vanja hadzic
27 Aug 14 07:24:24
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
FinancialTrader
27 Aug 14 07:23:39
$FB they missed out buying yesterday .. d/g likely to buy.. lol
Wealth 101
27 Aug 14 07:23:37
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
Evener Investment
27 Aug 14 07:23:35
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
burekey 47
27 Aug 14 07:23:30
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
Frank
27 Aug 14 07:23:27
#talkingheads comes on @CNBCopinion from #janney and talks in his "voice" $FB $YELP has fluorescent lt. tan. Clueless sm. business sales!!!
Scott Thurm
27 Aug 14 07:23:23
RT @ericjackson: $FB FCF in Q2 = $872M $BABA FCF in Q2 = $1.7B
Bruce J Moschella
27 Aug 14 07:23:08
$FB 120 Minute Update
Media Traffic
27 Aug 14 07:23:07
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
FOREX Insight
27 Aug 14 07:23:03
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
Alfredo Cornejo
27 Aug 14 07:21:57
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
Billy
27 Aug 14 07:21:56
what a dumb dg for $FB weakness won't last long
Dreamers'Trade
27 Aug 14 07:21:25
$FB $TWTR pullbacks are entering chance to catch the trend. Trend's stil on upside.
José Ignacio Guarino
27 Aug 14 07:20:35
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
Lillian Zhao
27 Aug 14 07:20:33
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
INAI
27 Aug 14 07:20:31
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
nelson neki kimilu
27 Aug 14 07:20:27
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
Alvaro
27 Aug 14 07:20:19
RT @MarketWatch: Tech stocks are mostly in the red. $FB dropped after its rating was cut to neutral from buy. http://t.co/tm8to0Y6mm http:/…
Minh
27 Aug 14 07:20:14
RT @mnycx: $TWTR nice. Let's see if can hold/ continue. The $FB downgrade scared me away from buying back in today.
Billy
27 Aug 14 07:20:09
hoping we get a decent pullback here in $FB so I can get long again
TraderMinute
27 Aug 14 07:19:51
With $FB are you willing to hold through some consolidation? If yes, hold on, if not just get out and move on.
Bulls vs Bears
27 Aug 14 07:19:46
$FB: Why TheStreet Ratings Team Rates Facebook (FB) Stock a 'Hold' http://t.co/9OfNVjsDPl http://t.co/PX1PcPEvua
703trader
27 Aug 14 07:19:43
I trade much better after a long early morning run $SPY $QQQ $DIA $FB $AAPL
chiefrocker in DC
27 Aug 14 07:19:27
added more $FB here at 74.7.. averaging down to around 75.1
				
				
By  +Follow October 16, 2013 9:06AM
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