How to trade Twitter shares hundreds of millions in 140 characters

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Twitter IPO: as it happened

Social network Twitter floated on the New York Stock Exchange, in the most hotly anticipated IPO since Facebook, with a value of $14.2bn.

By Sophie Curtis, and Radhika Sanghani

9:18PM GMT 07 Nov 2020

Latest

21.18 That’s where we leave our coverage of Twitter’s stock market debut. Thanks for reading.

21.11 Twitter shares have closed at $44.90, up more than 72pc on the day. Here is a quick look at the facts:

Intraday High: $50.09

Intraday Low: $44.00

20.37 The shares are starting on a slight downward trend as we head towards the closing bell in the US. Now trading at $45.82

Ryan Detrick, analyst at Schaeffer’s Investment Research:

IPOs are all about the hype and with less than an hour to go in trading, Twitter shares are not selling off, which means it was a successful IPO.

20.09 The shares are currently trading at $47.53, up 82.3pc.

20.07 Twitter’s certificate of listing:

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19.50 Goldman Sachs and other underwriters on Twitter initial public offering will share about $59.2m for managing the sale after accepting one of the smallest fee rates for a US IPO this year, Bloomberg has reported.

19.38 After jumping in early trading, the shares setlled back to their opening price. But they have been steadily climbing throughout the day:

19.13 Shares still holding steady at $46.53, up 78.9pc.

19.10 Interesting fact of the day: Jack Dorsey sent the first tweet on March 21, 2006. It read: “Just setting up my twttr.”

19.05 The stock exchange has followed that up by saying that the flotation went according to plan. David Ethridge, who heads the NYSE’s IPO business, told The LA Times:

Perfect. Couldn’t be better. The market is working the way it should.

18.45 The NYSE has just posed this picture of Dick Costolo on Twitter, congratulating the social network on a great debut:

18.31 Our Questor editor John Ficenec believes that “without a solid track record of post-tax profits Twitter’s share price is reliant on the investors’ febrile confidence”. He believes investors should avoid the high-risk stock. Do you agree?

18.13: The share price is back over $46

18.05: Take the Telegraph’s quiz to see how much you know about Twitter

18.00: Here’s how the graph is looking after two hours:

17.55: The chief strategist at online brokerage TD Ameritrade says the debut has been ‘flawless’

17.50: Peter Garnry, Head of Equity Strategy at Saxo Bank comments:

Twitter’s IPO shows the sublime and ridiculous nature of our capital markets. Sublime because the IPO went smoothly in terms of trading, but also because it shows how the capitalist system allocates capital to growth companies. But the IPO is also ridiculous because these tech IPOs have become like a video game cheered by ordinary people and the media. The valuation at these price levels is disconnected from any logical calculation and reflects a huge downside risk for investors if Twitter does not meet expectations at every quarterly earnings release from now on. For Twitter it is the end of a long journey towards the public market. For investors this is the beginning of nerve-racking journey of whether Twitter can deliver on the huge expectations.

17.42: We’re running a poll: How much would you pay for a Twitter share?

17.36: Twitter CEO Dick Costolo (R) celebrates the Twitter IPO with Twitter founders Jack Dorsey (L), Biz Stone (2nd L) and Evan Williams on the floor of the New York Stock Exchange.

Source: REUTERS/Brendan McDermid

17.30: Twitter IPO charts from Nanex:

17.23: ‘TWTRQ’ stock is reportedly up as much as 1,800 per cent as investors confuse the company Tweeter for Twitter. Tweeter Home Entertainment Group Inc. stock is now trading at 5 cents. It hit as high as 13 cents in morning trade, according to MarketWatch.

(Some of these tweets may be written in jest):

17.20: Twitter bite-sized facts:

Twitter’s 73 per cent opening gain is 6th-biggest on record for U.S. listed IPOs that raised more than $500 million
At $25 billion, Twitter has a larger market value than S&P 500 components like Kellogg and Netflix
The company sold 70 million shares for $26 apiece on Wednesday, raising $1.8 billion

17.17: Twitter now has a market capitalisation of $25bn which exceeds LinkedIn’s $23.8bn and trails Facebook’s $116bn. But, according to Bespoke Market Intelligence’s Q3 survey, Facebook users are far more likely to click on advertisements compared to Twitter users. In fact, while just 13.4 per cent of Twitter users have ever clicked on an ad, the number of Facebook users that have clicked on ads at some point is more than 2.5x that at 35.1 per cent.

17.12: Twitter share price is currently at $45.14. After an inital peak it seems to have stabalised at around the $45 mark.

17.07: According to Reuters, consolidated volume on Twitter shares hit 5 million after 30 minutes of trading.

16.57: Brian Weiser, Pivotal researcher, thinks TWTR shares should only be $30 not $45. He tells Bloomberg:

For the $30 billion Twitter’s valued for, you could buy the whole of Yahoo. We can use Facebook and Google to see where the market is. We can say that Twitter is a bit riskier than Facebook, but that it’ll grow faster because it’s smaller.

He said this means a $30 price is legitimate, but not $45.

16.50: In an interview with CNBC’s “Squawk on the Street”, Twitter CEO Dick Costolo talks about Twitter’s future:

When I think about our platform as public, realtime, conversational and distributed, as long as we invest in amplifying those characteristics, in service to making Twitter the indispensible companion to life in the moment, to the live experience, then our success will be determined by our ability to go amplify those characteristics. We don’t feel like we need to either pivot from many of those characteristics or invest in a fifth characteristic that we don’t have. It’s all about amplifying the existing characteristics of the platform.

I think it’s all about now the very long, long-term business we’re trying to build. We have an absolute perspective on the long-term kind of company we want to be, in service to being the public conversational realtime distributed platform. We believe we’re the only company that is all of those at scale and in service to amplifying those characteristics and growing the business to really enable the 2.4 billion connected people in the world to all become users of the platform.

16.45: Here’s a round up of the funniest Tweets we’ve seen today. All IPO-related of course:

16.42: SumAll has done some analysis to work out much revenue a tweet is worth. It found that a single business tweet on average generates an additional £16.06 ($25.62) in revenue, compared to not tweeting at all. Overall, successfully integrating Twitter into your digital marketing efforts increases total revenue by 1-2%. Comparatively, however, SumAll found that Instagram followers are worth 10 times one on Twitter.

16.40: The latest figures from Google’s Finance page for TWTR shares

16.38: Some people are commenting on the rapid fluctuation in share price:

16.36: Figures from MarketWatch:

16.27: “Twitter’s first 20 minutes of disaster” by Alessio Rastani, stock market trader

16.23: Trading just below 45, the original share price, and everyone is waiting to see what number it will close at.

16.22: Duncan L. Niederauer, CEO of NYSE, told Bloomberg one of its outside network providers had its own network problem this morning but it was resolved. He added:

The message traffic on Twitter is not out of the ordinary. First of all there’s times when people are allowed to send in market orders, and you’ll know there’s times when they can’t. We tell people to basically play by the rules.

16.21 Twitter shares have hit an intraday high of $50.09, up 92pc on the float price.

16.15: Shares currently at $45.62

16.12: Jack Dorsey also posted a Vine on Twitter of the stock exchange:

16.10: Jack Dorsey has tweeted congratulations and thank you to his team

16.05: Twitter share price briefly hits $50 per share but then begins to fall

16.02: Anthony Noto, partner and co-head of global media at Goldman Sachs, breathes a sigh of relief at the opening share price.

15.59: A real-time view of TWTR’s shares from Google’s Finance page.

15.56: Within the first few seconds of trading, shares surged from $26 to $46. Here’s how it affected the fortunes of Twitter’s top investors:

15.53: View of the trading floor – courtesy of NYSE’s Twitter feed.

15.51: Twitter opens at $45.10. That is a $32 billion market cap, making Twitter the single most expensive stock in all technology, according to Bloomberg

15.49: Interestingly, Facebook is currently at $48.06, so Twitter could surpass it on day one

15.47: Still waiting.

15.43: Latest range $45-45.25 according to CNBC

15.40: NYSE update: Range shifts to $45.50-46.50. Price discovery continues.

15.38: Dick Costolo spoke to Bloomberg from the trading floor and said:

We have so much work to do – I’m looking forward to getting back to work. The thing that surprised me most about the IPO process is the almost spectacular understanding of the service that so many investors we met, have.

15.35: According to the Wall Street Journal, analysts who work for Goldman Sachs and other banks on the IPO have been privately telling select investors that Twitter’s revenue may not increase as fast as expected. The underwriters’ analysts are predicting 55% growth next year. The rest of the Street is estimating 80%. For the following year, it’s 32% vs. 58%.

15.32: This is NYSE COO Larry Leibowitz giving Cheryl Fiandaca, bureau chief of Boston police (who also rang the bell), a crash course in IPO according to Evergreenest:

15.30: Joshua Raymond chief market strategist of Cityindex.co.uk, comments:

Prices are expected to launch between $43-$47 which is absolutely stunning considering initial launch prices a mere week ago was just $17 to $20. We knew Twitter shares would be in high demand but perhaps this still goes down as hugely impressive, and is further evidence of the hunger to invest in innovative new media types such as social media. IPO’s are of course highly volatile so whilst this would appear to be a very successful market debut for Twitter, we must take a step back and judge investor appetite over a longer period of time.

15.29: In case you missed it earlier, here is our list of Twitter’s top 140 users

15.28: NYSE update: Range shifts to $43-47. Price discovery continues.

15.26: It has been nearly an hour now since the NYSE opened and still no action. Some people are starting to get impatient:

15.22: Bankers wanted Twitter to push the price up from $26, but Twitter execs were very conservative and didn’t want to, according to Bloomberg.

15.20: Media Bistro editor Shea Bennett has tweeted this picture of the Twitter founders waiting for trading to begin:

15.17: Back in San Francisco, the protestors are still going strong outside Twitter HQ. They seem to be anti-gentrification and pro-affordable housing.

15.16: The first trade is rumoured to happen between 10.30 – 11.00 in New York (15.30 – 16.00 UK time). Stay tuned.

15.10: The current estimated opening share price of between $44 and $45 corresponds nicely with the latest grey market estimate from IG of $42.40 by the end of the day, suggesting there will be a big spike when Twitter begins trading and then the price will remain fairly constant.

15.08: Twitter employees are sporting the blue bird on their clothes in the HQ in San Francisco, according to Bloomberg. They got there early to watch the bell ceremony.

15.06: The opening is reported to be between $44 and $45

15.05: Assuming the over-allotment is fully exercised, at $2.1bn Twitter’s IPO is the second largest IPO by an American internet company on record, behind Facebook ($16.0bn) and ahead of Google ($1.9bn), according to Dealogic. It is also the biggest American venture capital IPO of 2020 YTD and potentially the third largest on record behind Facebook and Fox Entertainment Group ($2.8bn)

15.01: Dick Costolo has told Bloomberg: “We have a tremendous amount of investment that we want to do”

14.59: NYSE has announced an update: update: Range shifts to $42-46. Price discovery continues.

14.58: Sir Patrick Stewart’s appearance ringing the bell was a bit of a surprise. Here’s what he said about it:

It’s a little bit late in the game for me to become a poster boy for any organization.

14.57: Sources at the New York Stock Exchange have said it will take its time over “price discovery”, the mechanism by which its Twitter’s opening price. Usually this process takes around 15 minutes for a new listing, but NYSE will spend longer on an IPO as high profile as Twitter’s. It could take as long as two hours.

14.56: The NYSE has announced the first indication of prices is $40-44:

14.54: Some Twitter users are adamant they won’t be buying any shares, whatever the price.

14.50: We’re not sure how long we’ll be waiting for trading to start – it could be up to an hour. So in the meantime, here are some more fun facts:

The average Twitter user has 208 followers and spends 170 minutes on the site every month.
About 20 million Twitter accounts are believed to be fake and 40 per cent of active users simply consume content on Twitter, rather than send tweets themselves.
It took three years, two months and one day for the first billion Tweets to be sent on the platform. The same number are now sent every 48 hours.

14.46: Meanwhile in San Francisco protestors have collected outside Twitter HQ. Picture from Heather Somerville, Bay Area News Group reporter:

14.43: Users on Twitter are now speculating about Twitter’s first share price, suggesting it could be over the $26 originally thought.

14.40: Jon Myers VP & Managing Director EMEA, Marin Software, an ad tech provider that manages $5 billion ad spend globally, comments:

The challenge for Twitter is how can it accelerate the commercial returns for investors whilst, at the same time, not alienating its loyal user base. It needs to figure out how to innovate with new ad formats that deliver for brands without compromising the clean simplicity that made it popular in the first place. Looking to the future, I would expect it to experiment with different innovations and, if Facebook is anything to go by, take a few wrong turns along the way. Like Facebook, who are now above their initial IPO price, I expect them to strike the right balance in the long term through ad innovation, offering value for advertisers and investors alike.

14.36: Twitter just announced the bell on its own platform with the Tweet below, which Jack Dorsey re-tweeted immediately.

14.35: The trading floor is absolutely crammed with reporters, waiting for shares to start trading

14.30: Sir Patrick Stewart and nine-year-old Vivienne Harr ring the opening bell. Vivienne once ran a lemonade stand for 365 days to end child slavery, and represents movement Make a Stand.

14.29: David Faber from CNBC Tweets about accounts being oversubscribed:

If you’re buying online, the process is almost the same as buying UK shares. You can track the delayed share price – typically a 15-minute delay – until you are actually logged in and have requested a quote. At that point your broker will generate a real-time quote which will appear on the screen with a ten or 15 second countdown. If you choose to execute the trade you need to do so within that period, otherwise the quote expires, and you would need to request another. When buying US shares you will be quoted the “home” currency (so US dollars for Twitter). You should also see the exchange rate and sterling price either on the same web page or the preceding one.

14.19: New York Times DealBook points out that, at its current valuation, each of Twitter’s 230 million users around the world is worth $78.

14.15: Emmett Kilduff, CEO of Eagle Alpha, which has published a report on the Twitter IPO says:

There is a lot of online conversation around the self-serve ad platform and how this needs to be improved. You’d expect this to have been on the roadmap for some time – maybe the MoPub acquisition was a quick fix ahead of the IPO. With advertising being critical to Twitter’s revenue stream, this is an area in clear need of improvement and something the marketing and advertising industries will be watching closely.

We were also incredibly surprised by the number of fake followers there were. Estimates suggest that Britney Spears has as many as 36 per cent, that’s around 7 million users, yet we found few comments online by advertisers and advertising agencies complaining about this.

Finally, I think expectations were well managed ahead of the IPO – I expect it to trade well.

14.13: Time for a quick recap of Twitter’s history in six-second bites, from a team of Telegraph correspondents:

14.07: Rupert Staines, MD UK & Europe at RadiumOne, comments:

Twitter’s valuation may seem high, but we have to be conscious that the global marketing industry is worth hundreds of billions of dollars – a pot of money that we expect online advertising platforms to be taking an increasingly large portion of in the future. In the first half of this year in the UK alone, for instance, the IAB has reported that Digital AdSpend was worth £3.041bn.

We’re seeing a distinct shift towards online advertising, in general, and any discussion of Twitter’s valuation has to be viewed in the context of the market as a whole.

The opportunity for Twitter to capitalise on the mass of consumer data it has is massive. The company will have to tread a fine line between pleasing its advertising partners and its user-base, but as it refines its targeting mechanisms we would expect to see more relevant adverts appearing in users’ streams.

14.02: The NYSE will open in just under half an hour. To reiterate, shares will not start trading at the opening bell. Instead, NYSE is expected to spend upwards of 15 minutes getting everything in order for a smooth start.

13.52: The New York Stock Exchange will live stream Twitter’s IPO on Thursday morning. It is the first time it has broadcast an IPO or opening bell event in its 225-year history. The live stream is expected to kick off in about 22 minutes, and can be viewed here:

Scott Cutler, executive vice president and head of global listings for the exchange, said in a statement to Mashable:

This channel will offer anyone a front row seat to the world’s biggest stage in business and we’re excited for it to go live for Twitter’s bell ringing ceremony

13.51: Questor Editor John Ficenec warns that the much-awaited stock market listing of the social networking site is high risk, and one to avoid:

Social networking site Twitter is coming to the New York Stock Exchange having never made a profit. For investors, that greatly increases the risk of a permanent loss of capital.

Without a solid track record of post-tax profits the share price is reliant on the investors’ febrile confidence. The dotcom boom of a decade ago was an example of extreme investor confidence when some companies’ valuations were based on the number of clicks their websites got, and had little or no relation to their profits or revenue.

13.44: Matt Warman, Telegraph Technology Editor, questions whether Twitter will make any money:

On Twitter, the real value comes from the ease of one-to-one communication. It’s a great platform for broadcasting to millions, indeed, but its real power comes from the personal. So whether it’s a train company answering your individual question or a supermarket dealing with a complaint, Twitter is the ultimate customer service channel.

Unfortunately, it’s in advertising that the real money lies: Twitter can analyse who you follow and your followers to see what might be most valuable. And it can see where some of its users are. But its path remains unclear – users won’t stand for a stream of adverts, but that seems to be powering much of the hype behind today’s IPO. Perhaps its real power is in extracting just a tiny amount of value from each user, which cumulatively justifies the multi-billion dollar valuation.

13.37: Specialist Glenn Carell, who will handle the Twitter IPO, works at his post on the floor of the New York Stock Exchange:

13.33: News in that cosmetics company Cosnova will become the first company to leverage Twitter’s social video advertising product Amplify on a UK and pan-European basis.

Through Twitter Amplify and MTV’s international Twitter accounts, essence cosmetics will deliver shareable branded video content leading up to and during the “2020 MTV EMA”, including real-time highlights from the show and its most buzzworthy unexpected performances, backstage moments, red carpet interviews and MTV News reports.

13.25: Kaja Whitehouse, a New York Post financial reporter, Tweets live from inside the NYSE, penned in with the other journalists.

13.21: Twitter’s page on Google Finance’s New York Stock Exchange section is ready to go, and will be updated in real-time when the bell rings.

13.16: US analyst Evercore suggests that, while Twitter has clear similarities to Google, Facebook and LinkedIn, it exceeds these alternatives on the basis of its branded ad potential:

By boiling the drivers down to MAU growth, ad engagements (paid clicks), and cost-per-engagement (CPE), we estimate that Twitter will monetize

2bn ad engagements (clicks) this year, or just 0.3% of Timeline Views, at a $0.32 CPE. We arrive at these drivers using S-1 disclosures on the sequential changes in ad engagements and CPEs, leveraging conversations with marketers on the pricing level of CPEs at the time these disclosed trend lines began.

13.10: The Twitter IPO is now trending on Twitter as #IPO – but only in San Francisco. In London and New York, it is still being beaten by #saintsfc and #starbucks respectively.

13.08: Some New Yorkers are reportedly treating the IPO as a photo opportunity. Photo journalist Anthony Quintano tweeted the picture below and said: “This is what everyone is doing as they pass the New York Stock Exchange this morning.”

13.04: Biz Stone was also a Twitter co-founder, but he was conspicuously absent from the list of the company’s largest shareholders. However, he is thought to have made millions by selling holdings over the last few years.

Saudi billionaire Prince Alwaleed bin Talal, who has invested $300 million in the company, also said in September that he will not sell any of his shares in Twitter when it goes public.

12.56: Time to take a look at who will be getting rich from today’s IPO.

Evan Williams, who was Twitter’s CEO until 2020, holds the most shares, according to Twitter’s SEC filing. He holds 56,909,847 shares, or 12 per cent of the company, estimated to be worth $1.48 billion.

Current chairman Jack Dorsey holds 23,411,350 shares, or 4.9 per cent, (estimated to be worth $608.7 million), and Dick Costolo holds 7,589,608 shares, or 1.6 per cent, (estimated value: $197.3 million).

12.49: Twitter founder Jack Dorsey re-tweeted an inspirational quote earlier this morning as he gears up to see his company go public:

12.44: A strip club is reportedly handing out leaflets for its Twitter IPO party, outside the Twitter HQ in San Francisco. All Twitter employees can go for free and get ‘VIP perks’:

12.40: Twitter is expected to earn $582.8 million in global ad revenue this year, according to eMarketer, before growing to nearly a billion in 2020. More than half of the company’s ad revenues are expected to come from mobile ad revenue this year, both in the US and globally.

12.37: Anne McCreary, Digital Strategy Director at global media agency Carat, suggests that Twitter is developing into the second screen companion to TV?

Twitter is organically developing into the natural glue that binds TV to second screen. Twitter is ideally placed to help marketers to make the jump from Above The Line (ATL) advertising into the social space and user interaction. Twitter and its users are defining a new connected era, harnessing the motivating power of TV advertising and consumer interaction to redefine what a brand is and what shared content should be. People will happily evangelise brand content and the response is instantaneous – like a wave rippling outwards.

12.32: Twitter shares are odds-on to end the year lower than their float price according to Ladbrokes. The bookies are offering odds of 1/2 that following the IPO, the shares fall to close at below their opening quote at the end of 2020, with odds of 6/4 applying should the stock close the year higher.

12.26: Katy Perry recently overtook Justin Bieber as the most popular person on Twitter. Perry has 46,561,179 followers compared to Bieber with 46,526,319.

12.20: Time for some quick-fire Twitter facts:

There are more than 200 million active Twitter users worldwide
More than 500 million Tweets are sent on the platform every day
70 per cent of Twitter of accounts are outside the US
In the UK, there are now more than 15 million active Twitter users
China is the country with the most Twitter users with 35.5 million

12.16: Chris Andrew, Managing Director, Europe and UK, Hearsay Social has the below to say:

Twitter’s IPO, alongside Facebook and LinkedIn’s continued financial growth, is a firm demonstration that social media is here to stay and that businesses must take advantage of it. We’ve only scratched the surface of how consumers and businesses use Twitter, but it is already demonstrating its value beyond small marketing projects; it is a proven platform for increasing sales.”

Twitter has a unique set of big data which can give advertisers and salespeople the power to connect with the right people at the right time. It is proving to be an invaluable platform for companies to build relationships and reach their customers on a one-to-one basis, and the growth that will come through its IPO will only increase those opportunities.

12.13: Some Twitter users have managed to extracted some humour from the Twitter IPO, with a parody of T.S.Eliot’s poem The Love Song of J. Alfred Prufrock:

12.08: According to The Wall Street Journal, analysts who work for Goldman Sachs and other banks on the IPO, which raised $1.8 billion, have been privately telling select investors that Twitter’s revenue may not increase as fast as expected. The underwriters’ analysts are predicting 55 per cent growth next year while the rest of the Street is publicly estimating 80 per cent. For the following year, the analysts have predicted 32 per cent against 58 per cent.

12.04: Floating on the stock market will place new pressures on Twitter to make money. The Telegraph’s Head of Technology, Matt Warman, warns that users should expect to see more adverts on Twitter:

Twitter must also work out how it can continue to evolve: is it simply a 140-character window on the world, with advertisers occasionally peering in, or will it add more from its Vine video-sharing app and from other media? What about audio and about making more of the links that so many users share via Twitter? All of these and more require attention.

11.59: Two more pictures of the New York Stock Exchange building covered with a Twitter banner:

And the second from Fox business reporter Lauren Simonetti, whose photo suggests the floor will be decorated with Twitter’s ticker:

11.55: The Twitter IPO is not (yet) trending on Twitter, but users have already coined the phrase: ‘Happy Twitter IPO day’.

11.49: Chris Whitelaw, chief executive at global digital performance marketing agency iProspect, has commented on the forthcoming IPO, claiming that although Twitter has been a massive success story, it is still early in its journey to achieve commercial success and must crack the challenge of monetising its user-base:

In order to drive revenues, Twitter must focus on mobile advertising. It is interesting to note that 49% of ad revenues at Facebook now come from mobile. The majority of Twitter traffic is also generated through mobile devices and this should be their area of focus, as a trusted way for advertisers to build their brands in what can sometimes be a fragmented and opaque market place. Linking television advertising with Twitter activity should unlock above-the-line budgets, and grow revenues significantly.

“However, Twitter needs to be careful and build an advertising model which doesn’t disrupt the user experience. It must create advertising formats that are highly targeted to the individual user, so that relevant and situational adverts are able to enhance the Twitter experience and user engagement

“If Twitter can fully capitalise on the dual-screen opportunity, then they will be able to merge the off-line and on-line worlds and build something incredibly exciting from a user experience, and from an advertiser perspective.

11.46: Model and TV presenter Tyra Banks has tweeted her support for Dick Costolo and Twitter:

11.43: Dick Costolo has said in an interview with CNBC that Twitter felt comfortable boosting its IPO price to $26 per share, because of the “enthusiasm” he saw on the road.

That enthusiasm from investors and their own use of the product, both from a user basis, and then from the potential of it as a monetization platform has been fantastic to see.

There’s nothing structural about Twitter that prevents us from having the kind of margin profiles of our peer group. We are investing for the long term. We think this is a long-term company — a company for which there is a fantastic use case for every person on the planet.

11.39: Mashable’s Brian Hernandez has tweeted a picture of the New York Stock Exchange this morning – it has got a big Twitter banner on it.

11.34: The Telegraph’s US Business Editor Katherine Rushton says there is a lot riding on Twitter’s initial public offering:

If it goes well, analysts expect a glut of other dotcom firms to follow, pushing up valuations all round. But a poor performance will solidify fears of a new dotcom bubble, making the road to market harder for businesses such as Box and King, with their own IPOs in the offing.

11.27: Financial services company IG has been running a grey market for Twitter since it filed its S-1, allowing clients to trade ahead of the official debut. David Jones, chief market strategist at IG is currently predicting that Twitter’s share price will reach $42.40 by the end of the day.

11.23: Shares will not start trading at the opening bell on Thursday. Instead, NYSE is expected to spend upwards of 15 minutes getting everything in order for a smooth start. In high profile IPOs, the shares often jump on opening, so investors will be much more sharply focused on Twitter’s closing price as a measure of its success.

11.19: Twitter has eschewed the Nasdaq stock exchange, usually favoured by technology companies, and opted for the New York Stock Exchange. It will trade under the ticker “TWTR”.

11.15: The company had been relatively restrained about its ambitions for its market debut, but increased the price target to $26 a share last night, just days after it raised the range from between $17 and $20 to between $23 and $25. This rapid escalation follows strong demand from investors but it is also likely to stoke fears of a repeat of Facebook’s disastrous market debut in May last year.

11.11: Full announcement below:

11.05: The social network has priced its range for today’s flotation at $26 per share, valuing the company at $14.2 billion

11.00: Welcome to The Telegraph’s live blog of Twitter’s Initial Public Offering. The company is expected to float on the New York Stock Exchange after the market opens at 14.30 GMT today. $50.09

Twitter Investors Williams to Branson Await IPO Windfall

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Twitter Inc.’s initial share sale is poised to generate riches for its founders and venture investors — as well as celebrities from Richard Branson to Ashton Kutcher and a host of lesser-known backers who bet early on the microblogging service.

Take Jay Virdy, who left AOL in 2007 to run Summize, a search engine for real-time information. Twitter acquired Summize in July 2008, doling out close to 10 percent of its stock at the time to Virdy, his co-founders and investors, said three people with knowledge of the transaction, who asked not to be identified because the terms weren’t disclosed.

“When I told people I was selling the company to Twitter, they all said, ‘What the hell is Twitter?’” Virdy, 49, said in an interview. “I said, ‘Don’t worry, it’s going to be big.’”

Summize’s stock, which was then valued at around $10 million and would now be worth hundreds of millions based on private-market valuations, has created the type of fortune that’s made Silicon Valley famous. It also illustrates how Twitter’s plans to go public in the largest IPO for a U.S. technology company since Facebook Inc. won’t just reward the usual assortment of venture investors, founders and early employees. A cast of hundreds of other private shareholders — who had the wealth and means to get access to the stock — are also set to be enriched.

Unlike most startups, which have concentrated pools of investors, the microblogging company’s shareholder base has swelled since its 2006 founding. Along with co-founders Evan Williams and Jack Dorsey and investment firms Union Square Ventures and Benchmark, Twitter’s stock has spread to buyers ranging from large institutions like Morgan Stanley and T. Rowe Price Group Inc. to special investment funds set up for the rich and famous.

Shareholder Parameters

In total, Twitter has raised more than $700 million , with legendary venture firm Kleiner Perkins Caufield & Byers committing $200 million in 2020 when the company was already worth more than $3 billion .

More than 50 individuals and institutions now own shares through direct purchases, secondary sales and acquisitions, and hundreds more are invested through various funds. That group includes Branson, the billionaire founder of Virgin Group; actor Kutcher; and Saudi Prince Alwaleed bin Talal, said people with knowledge of the matter.

Co-founder Williams is the biggest single holder with about 15 percent of the shares, according to people familiar with the company’s ownership.

July Filing

The breadth of the shareholder base underscores the avid investor interest in the San Francisco-based company and its more than 200 million users. Twitter in July filed confidential paperwork with the U.S. Securities & Exchange Commission to hold an IPO, said a person with knowledge of the matter. Technology blog AllThingsD earlier reported on the July filing.

Twitter currently has about 620 million shares outstanding on a fully diluted basis, said two people with knowledge of the company’s finances. While the expected market capitalization hasn’t been decided, private market investors are valuing the company at $10.5 billion to $18 billion , people said.

Gabriel Stricker, a spokesman for Twitter, declined to comment.

The experience of venture capitalist Josh Felser exemplifies how Twitter shares have proliferated. Felser co-manages a $25 million fund called Earlybird set up two years ago to buy secondary shares for outside investors. His firm, Freestyle Capital, was a shareholder in startup BackType, which Twitter acquired in 2020, and Felser and his co-founder Dave Samuel individually purchased Twitter shares from an employee a year earlier when the company was valued at about $3 billion .

‘No Brainer’

“It was a no brainer for us,” said Felser, who’s based in San Francisco. “We had to do it purely on what we could see about Twitter’s increasing importance in the fabric of the Internet.”

Shareholders face plenty of risk. Social-media companies with sky-high private valuations have plummeted on the public markets in recent years as investors doubted whether their business models could live up to the hype. Zynga Inc. is 62 percent below its 2020 IPO price, and Groupon Inc. is down more than 40 percent. Facebook lost more than half its value in the four months following its May 2020 IPO, before climbing back recently.

Twitter’s business — which relies on advertising — is also nascent. Yet ad revenue is projected to rise 63 percent to $950 million next year from $582.8 million in 2020, according to EMarketer Inc.

Big Winners

Among the biggest winners in the IPO will be angel investors in Odeo, the podcasting startup created by Williams in 2005. After Odeo failed amid competition from Apple Inc., Williams returned money to his backers. A few of them — Mike Maples, George Zachary and Ron Conway — turned around and invested in his next project.

That ended up being Twitter, a messaging service that let anyone publish their thoughts online in 140 characters or less – – posts known as tweets. In mid-2007, Maples put the $25,000 he had originally committed to Odeo into Twitter, though he instantly had buyer’s remorse. Everyone around him was laughing at the site’s absurdity, he said.

“The lesson of Twitter has been that the really great outcomes seem kind of crazy at the time you have to decide,” Maples said in an interview.

Hustling In

Maples, who now runs venture firm Floodgate Fund, invested in Twitter at a $20 million valuation alongside backers including Naval Ravikant, who put in $100,000 out of a fund he had just raised. Ravikant, founder of startup investing site AngelList LLC, said a typical tweet at the time went something like: “Hey, I took a shower and it was really hot.”

Still, Ravikant was a fan of Williams, who prior to Odeo had sold the site Blogger to Google Inc.

“I heard about Twitter, saw the product, and hustled my way into the deal,” said Ravikant, whose stake is now worth more than $20 million .

That hustling included scoring a meeting with Williams at the Twitter office where Ravikant scribbled recommendations on a whiteboard for how the company could grow through viral marketing. The response was thanks but no thanks, Ravikant said, though they let him invest anyway.

The spreading of Twitter shares was aided by the emergence of a small group of investors who doubled as resellers. Startup backers Chris Sacca and Conway, in addition to establishing their own stakes, helped others seeking a slice of the company. They were given special rights by Twitter to buy stock when employees wanted to sell.

Arranging Deals

Conway, a longtime angel investor who backed Google and PayPal, facilitated a sale of $80 million of Twitter shares to venture firm Andreessen Horowitz in 2020. Bloomberg LP, the parent of Bloomberg News, is an investor in Andreessen Horowitz.

Sacca, a former Google employee, first invested $25,000 in Twitter in the 2007 round. He later raised outside capital to purchase more stock, and then worked with JPMorgan Chase & Co. on a fund to buy hundreds of millions of dollars of shares.

“A lot of people have pinged me for the stock over the years,” said Ravikant. “It is one of those products that, because so many people use it, it attracts a lot of interest from retail buyers.”

The magnitude of the wealth created by Twitter’s growth couldn’t have been predicted when Summize opted to sell itself and people like Ravikant and Maples placed their wagers. That’s the beauty — and the curse — of startup investing, Maples said.

“For a long time, people said how could you have invested in something so trivial and stupid at such a high price,” he said. “People underestimate luck.”

To keep it brief: Twitter files for IPO

SAN FRANCISCO — Twitter made the surprise announcement that it planned to sell stock to the public as only Twitter could: in less than 140 characters.

It revealed Thursday that it had filed the initial paperwork for a public offering in a tweet. A second tweet said simply, “Now back to work,” and showed a picture of Twitter’s San Francisco offices.

Those were the only public comments from the 7-year-old company about to mount the most hotly anticipated IPO since Facebook Inc. It marked the first step in a calculated effort to make its public debut more “low key” than Facebook’s, which was botched by runaway hype and pent-up demand for a social media IPO.

Equally unconventional was the manner in which Twitter submitted its paperwork. Potential investors will not get a glimpse of the company’s finances — at least not right away.

Twitter filed its preliminary prospectus with the Securities and Exchange Commission, known as an S-1, confidentially.

That means it does not have to release detailed financial information — including its revenue and income — until three weeks before it embarks on its “road show” for investors.

The stealth filing was made possible by a law signed by President Obama last year, the Jumpstart Our Business Startups, or JOBS Act, that enables companies with less than $1 billion in revenue to file confidential IPOs.

Analysts say these “secret IPOs” are a game changer for young technology companies like Twitter, giving them a chance to go public with less paperwork and fewer financial disclosures to the media and competitors.

But the confidential filing also makes it far tougher for analysts and investors to get a sense of how many shares Twitter would sell or how the shares would be priced.

How much money the company makes is a closely guarded secret. Research firm EMarketer estimates that Twitter will generate $583 million in advertising sales this year. It’s not forecast to cross the $1-billion threshold until 2020, when EMarketer expects Twitter to rake in $1.3 billion in ad revenue.

According to reports, the company became profitable in December and is on track to generate $650 million in revenue this year.

That’s a far cry from Google Inc. and Facebook, its chief rivals competing for the attention of the world’s biggest advertisers.

Twitter is rewriting the playbook of technology IPOs, said Max Wolff, chief economist and senior equity analyst at Greencrest Capital Management in New York.

A Twitter IPO could provide a huge boost to Wall Street investment banks — particularly lead underwriter Goldman Sachs — searching for a hot stock to excite investors. The prize: huge fees and bragging rights. Twitter was valued in its last funding round around at about $10 billion, and its public debut could trigger a boom in tech IPOs.

“If Twitter has a successful run — and I think there’s every reason to expect this to be successful in a way that Facebook wasn’t — you can expect a deluge,” Wolff said.

Twitter met with investment banks in recent weeks to capitalize on what analysts said was a golden moment for social media on Wall Street.

Facebook shares this week hit an all-time high, climbing above the $45 mark, the price that its shares reached on its first day of trading in May 2020. Investors have also pushed up the value of professional social networking service LinkedIn.

A successful IPO by one of the Internet’s best-known brands could power the stock market higher, analysts said.

“Internet stocks are valued at crazy levels right now, so the timing is perfect,” Wedbush Securities analyst Michael Pachter said.

California officials are also counting on the IPO to help pad the state’s coffers. Technology IPOs have already added hundreds of millions of dollars from capital gains taxes.

“Everyone in the tech world is trying to be the next Twitter, so if Twitter is successful, then you’re going to see a lot of folks bandwagon this way of going public,” Wolff said. “If this is as successful as there is every reason to expect it to be, there’s going to be a lot of me-toos, a lot of follow-ons.”

Twitter is hoping to go public by the end of the year, but the actual offering may not take place until early 2020.

With more than 200 million users — and by some accounts it is now approaching 300 million — Twitter is one of the most popular online hangouts. And, counting in its favor, more than half of Twitter’s revenue already comes from mobile advertising, eliminating one of the main concerns investors had about Facebook at the time of that social network’s IPO.

Alarm over Facebook’s ability to sell ads on mobile devices drove down shares after the company’s $16-billion IPO in May 2020, the largest technology offering on record.

Twitter is already trading at a premium — placing the value of the company between $15 billion and $16 billion — on the private markets, Pachter said. The key will be for Twitter not to flood the market with shares the way Facebook did.

Twitter has undergone a dramatic transformation under the leadership of Dick Costolo, a former Google executive. He took over the company as chief executive in October 2020, when it was known more for its 140-character messages and its quirky corporate culture than as a viable business.

The company had been whipped by management shuffles and inner turmoil. The service was so prone to outages that it had its own mascot: the “fail whale.”

And yet the company still managed to grow in popularity around the world — and began to gain traction with advertisers.

Costolo poached seasoned executives from rivals. He made the service friendlier to new users and helped popularize a whole new lexicon, including the hashtag (#) and the @ symbol handle.

He further pushed the service into promising and potentially lucrative new areas such as television. And he rolled out ambitious new advertising products.

Perhaps most important in his effort to keep his company’s IPO from becoming a public debacle: Costolo kept a nearly airtight lid on trading by employees and insiders on private markets.

As a result, analysts expect Twitter to avoid some of the problems that Facebook and Groupon faced when they went public.

Also, Twitter is going public at a particularly fortuitous moment, said Josef Schuster of IPO research and investment house IPOX Schuster in Chicago.

“The stock market is doing remarkably well, the economy is good, plenty of capital is available. The stock market is trading at an all-time high,” he said. “It’s been a very good year for IPO investors.”

Guynn reported from San Francisco and Chang from Los Angeles.

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