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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.

Results for FB
The LincolnList
19 Apr 14 15:00:11
What is the best way to learn? A book? DVD? Mentor? Let's take a look http://t.co/8DOV2O2zCB $SPY $FB
qasim alhammad
19 Apr 14 15:00:03
RT @BramdeHaas $GOOG search isn't threatened by Social search $FB $TWTR $LNKD http://t.co/jxa9xXrdMc
Tim Cozby
19 Apr 14 14:59:38
RT @Share4Jesus: RT FF @ergeekgoddess @2morrowknight 1 of 50 @HuffingtonPost bloggers defining success http://t.co/7iKb1Ml35d #in $fb http:…
Lluís Ahicart
19 Apr 14 14:56:55
Most Visited Website by Country" - $GOOG $FB #Baidu http://t.co/A1eOnuCUaC
Gabrielle Enriquez
19 Apr 14 14:53:50
“@TheStreet: .@Facebook Unveils NEW Feature: Nearby Friends. Creepy or cool? http://t.co/3Kvm7dCkia $FB” Stalker of the world rejoice!
Jonathan Morad
19 Apr 14 14:42:51
@drdrew1978 $FB this is definitely a great long term hold obviously gonna be a big swing on earnings likewise with $ZNGA
Jonathan Morad
19 Apr 14 14:41:28
@drdrew1978 bought $FB at 23 sold at 32 on earnings I didn't think it would run up to the 70s but u think FB is on the right track
Donte Aldaine
19 Apr 14 14:37:15
$WTW Awesome #Stock #Research $MRVL $IDXX $FB #StockMarket http://t.co/9JMF76deeY
Crew Gretzky
19 Apr 14 14:25:55
Get the latest on $TAP $SEE $HES $FB Check out http://t.co/vFUCCJaUY2
Jaydan Gelson
19 Apr 14 14:24:40
Is it breakout time on $TGI $MON $AAN $FB Worth a look http://t.co/zMtI2iMIbr
Ansel Gonzalez
19 Apr 14 14:19:44
$ADT #Stock Watchlist. Dont be left behind $NAV $JLL $FB #moneymanagement http://t.co/EOix7G0Oub
19 Apr 14 14:13:53
$UNP Looking for the next $PVH $CRM $FB #investing http://t.co/2Ex5ncJWxU
Rob McGavern
19 Apr 14 14:10:50
Whats going on with $SNA $G $FB $RT #investing http://t.co/DIdd8dp4jC
19 Apr 14 14:10:05
Google : Why the sky's the limit for Google and Facebook http://t.co/Ta7iDD5oZw $GOOGL $FB
Stock Herald
19 Apr 14 14:06:36
$FB: [video] Jim Cramer: Watch Apple and Facebook Amid Growth-to-Value Tran... http://t.co/S2INqDdpCZ
Stock Herald
19 Apr 14 14:06:36
$FB: Did Twitter Bottom on Tax Day? http://t.co/jik1PsYyDE
Inside Markets
19 Apr 14 14:05:51
The DEA loves face book. Primary method of catching crooks is seeing who they are linked to. Your $FB friends could be DEA.
John Satisfy
19 Apr 14 14:02:30
RT @FabulosityReads: RT @BramdeHaas $GOOG search isn't threatened by Social search $FB $TWTR $LNKD http://t.co/BHrdHWGt8o
Teo Black
19 Apr 14 14:01:06
$S Insider Trading updates on $TIBX $PAY $FB #NASDAQ http://t.co/RBIGcqQGip
Wendy Ewurum
19 Apr 14 14:00:04
RT @BramdeHaas $GOOG search isn't threatened by Social search $FB $TWTR $LNKD http://t.co/BHrdHWGt8o
Facebook Stock
19 Apr 14 13:59:33
Gillmor Gang: Action Items $FB #Facebook http://t.co/VgYn4pcMDw
Ansel Galvan
19 Apr 14 13:55:31
$SYY #Stocks you might want to sell $OV $Q $FB Give it a try http://t.co/ZbQj26VH8C
Jacob Golding
19 Apr 14 13:51:12
RT @2morrowknight: #Instagram is now the favorite social network among US #teens (Statista Charts) http://t.co/lKezZO5q2i $FB http://t.co/H…
Destiny Investments
19 Apr 14 13:49:00
@Csky100 $FB should give a nice euphoric run up from everybody wantin to long then have a big correction & we buy cheap again.
Gold Market
19 Apr 14 13:47:12
RT @Benzinga: #Social #Media #ETF Enters Bear #Market Territory $FB $FDN $LNKD http://t.co/MupRvzOxoT @fabiancapital
Max Ganik
19 Apr 14 13:46:25
Published $FB estimate on Estimize: +0.09 EPS and +100.32M Revs compared to Wall Street's consensus. http://t.co/mg2A7Ncsfa
19 Apr 14 13:44:09
$FB: [video] Jim Cramer: Watch Apple and Facebook Amid Growth-to-Value Tran... http://t.co/Vo1AJATVw7
19 Apr 14 13:36:40
@TheDestinyShow nice way of looking at it. My contention is there is little downside here unless $fb really misses, an unlikely scenario
Andrew E.
19 Apr 14 13:36:04
@JonathanBowa yeah, Zynga is gold. But $FB is making me pretty anxious
Byrne Bray
19 Apr 14 13:34:03
$FB [video] Jim Cramer: Watch Apple and Facebook Amid Growth-to-Value Transition http://t.co/Kh6NFGDx38
Rajan Soni
19 Apr 14 13:31:12
RT @TheStreet: .@Facebook Unveils NEW Feature: Nearby Friends. Creepy or cool? http://t.co/vonGfYRZSn $FB
Byrne Bray
19 Apr 14 13:29:11
$FB Did Twitter Bottom on Tax Day? http://t.co/LnyfFjNIxP
Stock Terminator
19 Apr 14 13:28:25
#Stock Market Reports on stocks like $FRX $WDC $NAV $FB Must see http://t.co/HZIEJZOjej
19 Apr 14 13:27:08
.@Facebook Unveils NEW Feature: Nearby Friends. Creepy or cool? http://t.co/vonGfYRZSn $FB
Marius Jackson
19 Apr 14 13:25:23
$PLD Are you Bullish on these #stocks $PF $SIRI $FB Goto http://t.co/BeXi7FIka4
19 Apr 14 13:24:03
$FB: [video] Jim Cramer: Watch Apple and Facebook Amid Growth-to-Value Tran... http://t.co/8nb2SroDZi
19 Apr 14 13:23:36
$FB: Did Twitter Bottom on Tax Day? http://t.co/MCEvfC1KXi
19 Apr 14 13:21:49
Is anyone planning on taking part in the #Alibaba #IPO? $FB $NFLX $TWTR
Destiny Investments
19 Apr 14 13:19:48
I see $FB future as a network company thats grows social networks which will bring massive value giving them google-like position.
19 Apr 14 13:12:05
$FB - [video] Jim Cramer: Watch Apple and Facebook Amid Growth-to-Value Tran... -> http://t.co/pAuD9Mi41b #stock #stocks #stockaction
19 Apr 14 13:12:02
$FB - Did Twitter Bottom on Tax Day? -> http://t.co/VZG5Lv1fDy #stock #stocks #stockaction
Timothy Sykes
19 Apr 14 13:09:38
NEW INFOGRAPHIC http://t.co/1MHMzuWpcR must read for all $FB $TWTR $LNKD $WB penny stock traders
19 Apr 14 13:05:35
$FB: Steven Cohen’s Point72 Asset Management lowers its stake in Zynga http://t.co/oh0imzkUEi
19 Apr 14 13:02:52
It could be breaktout time on $FB $CVX $WRB $CHTP Must have http://t.co/MVMaSccJAv
Marshall Hargrave
19 Apr 14 13:00:26
Facebook: Mobile A Success, Much More Success To Be Had $FB http://t.co/iBBsWxHMN4 http://t.co/SrFqQUbed3 ... http://t.co/R8Z8HL0Txw
The LincolnList
19 Apr 14 13:00:10
Buid a sustainable business in trading http://t.co/51MUfpZj3K $SPY $FB
Social Alpha Inc
19 Apr 14 12:56:58
Stocks trending on social media now: $GOOG $AAPL $FB $SPY. Trade on market buzz http://t.co/QYdMxh2gP8 #tradeSentiment
19 Apr 14 12:49:11
@TheDestinyShow thoughts on $fb earnings? Will momentum carry over from last report?
By  +Follow October 16, 2013 9:06AM



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