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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
BP
23 Oct 14 12:06:53
@Scubadoobe my ebola bids $splk 54 $fb 73.6 $nke 87 $nvda 17.6 $aapl 99 lol and algo's know about these bids lol.
1 Up Wall Street
23 Oct 14 12:06:23
Our #ALGORITHM is giving a hold signal on $FB pre-earnings, buy signal long-term. Aka too much risk before #earnings. http://t.co/wtAexD7BPf
Trill Trades
23 Oct 14 12:05:06
Ebola bullish for $FB and $BABA, everyone stays at home and orders stuff online. Right @smartertrader ?
Investimonials.com
23 Oct 14 12:04:10
RT @timothysykes: DONATING $10,000 CASH LIVE ON VIDEO https://t.co/nC3KRpJFqM awesome/fun moment for me @InvestorsLive get inspired $FB $TW…
Timothy Sykes
23 Oct 14 12:03:16
DONATING $10,000 CASH LIVE ON VIDEO https://t.co/nC3KRpJFqM awesome/fun moment for me @InvestorsLive get inspired $FB $TWTR $LNKD peeps!
Stacy Smith
23 Oct 14 12:02:59
RT @NPetallides: Dow up 250pts earnings CAT & MMM help greatly $FB Facebook new high $80.42, up 46% this year $AAPL Apple new high $105.0…
Marshall Moore
23 Oct 14 12:02:55
RT @BloombergNews: Up to 8.8 percent of Facebook's outstanding shares are about to come out of lockup: http://t.co/eE92txNtXW $FB http://t.…
AFPColorado
23 Oct 14 12:02:06
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
Wright Commo Inc.
23 Oct 14 12:02:05
RT @BloombergNews: Up to 8.8 percent of Facebook's outstanding shares are about to come out of lockup: http://t.co/eE92txNtXW $FB http://t.…
JP
23 Oct 14 12:01:44
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
PsychSignal
23 Oct 14 12:01:09
63.0% increased bullish conversations in $FB in the past 1 hour.
Seth Haller
23 Oct 14 12:00:32
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
Jan
23 Oct 14 12:00:20
RT @BloombergNews: Up to 8.8 percent of Facebook's outstanding shares are about to come out of lockup: http://t.co/eE92txNtXW $FB http://t.…
4-traders.com
23 Oct 14 12:00:04
Facebook : Exec Sorry About That Time He Acted Like An Unhinged Lunatic http://t.co/56Hpm1EkZX $FB
Quantheta
23 Oct 14 12:00:03
#TOPTICKERTWEETS $SPY $AAPL $CAT $YELP $IWM $DIA $SPX $UA $FB $YHOO #quantheta
Quantheta
23 Oct 14 12:00:03
#SENTISHIFTUP $HD $GTAT $FB $DAN $AAPL $QUAD $DJIA $GS $SKX $O #quantheta
Dr. Andy Heyden
23 Oct 14 11:59:32
"@MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in Sept. http://t.co/x0eyR8UDxu http://t.co/zLzmJ9KPdC"
Sabrina Rose
23 Oct 14 11:59:22
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
Richard Lurie
23 Oct 14 11:58:52
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
.♥' í ĺόvè ¥όü '♥.
23 Oct 14 11:58:50
RT @BloombergNews: Up to 8.8 percent of Facebook's outstanding shares are about to come out of lockup: http://t.co/eE92txNtXW $FB http://t.…
Bryan Leung
23 Oct 14 11:58:28
RT @BloombergNews: Up to 8.8 percent of Facebook's outstanding shares are about to come out of lockup: http://t.co/eE92txNtXW $FB http://t.…
Ken
23 Oct 14 11:58:18
In short, new users to monetize @JBoorstin: Why $FB is launching @Rooms: http://t.co/172CRkmmhx
stockmarketnow
23 Oct 14 11:58:04
RT MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: ... http://t.co/YviRsfFMEw
Mardochee Pierre
23 Oct 14 11:57:33
RT @BloombergNews: Up to 8.8 percent of Facebook's outstanding shares are about to come out of lockup: http://t.co/eE92txNtXW $FB http://t.…
Viral VideoMarketing
23 Oct 14 11:57:16
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
Bobby Wilbert
23 Oct 14 11:57:09
Snowden filmmaker: 'FACEBOOK gift to intelligence agencies' $FB http://t.co/t8aurRnrt8
Cutlass
23 Oct 14 11:57:01
RT @TheOptionDon: $SPY confirmed breakout above --->$195<--- as noted in my {VIDEO} yesterday. http://t.co/ipvsBMZbcy $AAPL $FB $GOOGL $AMZ…
Alpha Maven
23 Oct 14 11:56:56
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
Sinclaire Chase
23 Oct 14 11:56:54
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
Harry R. Weber
23 Oct 14 11:56:43
RT @BloombergNews: Up to 8.8 percent of Facebook's outstanding shares are about to come out of lockup: http://t.co/eE92txNtXW $FB http://t.…
Diana Vergara
23 Oct 14 11:56:34
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
The Wall St. Walrus
23 Oct 14 11:56:34
Looks my $FB speculation is paying off and $AAPL hit a new high. Good day #stocks #investing #apple #facebook #nasdaq #nyse #stockaction
FinanzLinksWORLD
23 Oct 14 11:56:31
RT @BloombergNews: Up to 8.8 percent of Facebook's outstanding shares are about to come out of lockup: http://t.co/eE92txNtXW $FB http://t.…
Online Loans
23 Oct 14 11:56:19
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
WT Wealth Management
23 Oct 14 11:56:12
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
Zubeyr Kamil Açıksar
23 Oct 14 11:56:08
RT @JBoorstin: Why $FB is launching @Rooms: http://t.co/D36iBU49B8
Destiney
23 Oct 14 11:56:07
RT @BloombergNews: Up to 8.8 percent of Facebook's outstanding shares are about to come out of lockup: http://t.co/eE92txNtXW $FB http://t.…
kimberly montserrat
23 Oct 14 11:56:04
RT @BloombergNews: Up to 8.8 percent of Facebook's outstanding shares are about to come out of lockup: http://t.co/eE92txNtXW $FB http://t.…
Julia Boorstin
23 Oct 14 11:55:35
Why $FB is launching @Rooms: http://t.co/D36iBU49B8
Bloomberg News
23 Oct 14 11:55:22
Up to 8.8 percent of Facebook's outstanding shares are about to come out of lockup: http://t.co/eE92txNtXW $FB http://t.co/oNur4LgU7b
Stock Moo
23 Oct 14 11:55:21
$fb: How Will Facebook (FB) Stock React To The New Rooms App Today? http://t.co/sJ21TmIgxs
Stock Moo
23 Oct 14 11:55:16
$fb: Facebook’s Rooms App Enables Groups to Share Anonymously http://t.co/A6Uaenzmsa
Stock Moo
23 Oct 14 11:55:16
$fb: What to expect from Facebook’s earnings http://t.co/QYhnMrtbUq
The Wall St. Walrus
23 Oct 14 11:55:09
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
Zubeyr Kamil Açıksar
23 Oct 14 11:55:00
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
Henry R.
23 Oct 14 11:54:33
RT @JeaYu21: $FB all out 80.03 on the shorts.
Jea Yu
23 Oct 14 11:54:29
$FB all out 80.03 on the shorts.
KeyStockNews
23 Oct 14 11:54:12
All out $FB and $BABA weeklies. 100% on $FB 75% on $BABA I'll take it.
Krysia Lenzo
23 Oct 14 11:54:10
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
Vince Von Hilton
23 Oct 14 11:53:43
RT @MarketWatch: $FB is expected to post $3.12 billion in sales for the quarter ended in September: http://t.co/SrJUfQ8Qmg http://t.co/xzXg…
				
				
By  +Follow October 16, 2013 9:06AM
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