Twitter's huge rally draws its share of skeptics

Twitter's debut as a publicly traded stock couldn't have gone much better Thursday, yet market pros remained cautious about its future.

In fact, it was the ferocity of the share price increase that scared even those who are bullish on the microblog social media network.

"Twitter the product is one of the most amazing things I've ever seen in 31 years of tech investing," Roger McNamee, Elevation Partners co-founder, said on CNBC's "Fast Money Halftime Report." "It just came out of nowhere."

However, investors know there's a difference between a great company and a great stock, and Twitter watchers fretted that enthusiasm may be outpacing fundamentals.

It's a trading stock today. Maybe it will be a trading stock for a while," McNamee added. "Me personally, I wouldn't buy here. Then again, I would never buy on the day of any IPO. That's just not how I work. I wait until things settle out and people have figured out what it's really worth. Once the emotions come out of it, that's the time I look to buy a stock like this."

Bob Peck, the first analyst to put a "buy" rating on the stock, told CNBC investors shouldn't be overly impressed with the debut and understand instead that they'll need to be in it for the long haul if they want to get real value.

He spoke as Twitter rolled to a 72.7 percent single-day gain to close at $44.90 after pricing at just $26.

The boom drew its share of skepticism, with Pivotal Research christening the stock with its first "sell" rating, based primarily on valuation. "With a price that pushes into the high 30s and beyond, Twitter is simply too expensive," the firm said.

Via: CNBC

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Twitter’s Market Valuation Suggests Wall St. Sees Huge Growth Potential

Twitter is a young company generating large losses as it competes in a highly uncertain sector of the economy.

And that is exactly why investors clamored for a piece of its initial public offering, which closed on Wednesday evening.

Twitter’s shares were priced at $26, giving the company an overall value of $18.1 billion, including stock that the company is likely to issue to employees. That makes Twitter worth more than many storied American corporations, likeAlcoa and Harley-Davidson. At that valuation, each of Twitter’s 230 million users around the world is worth $78. Going by such numbers, the public offering has been a tremendous success for the company, which raised $1.8 billion from the offering, a hefty war chest.

All this is impressive for a company that has racked up more than $300 million of losses in the last three years — and may not show real profits until 2015.

But investors are betting that Twitter is virtually destined to become wildly profitable as advertisers pay it increasing amounts of money to reach consumers who use the service.

“The possibilities and opportunities afforded by the platform are limitless,” Dick Costolo, Twitter’s chief executive, said in a company presentation to promote the offering. Still, if recent history has anything to teach, the euphoria is unlikely to last.

The fast-changing world of technology can be cruelly unpredictable. It tripped up companies like Groupon and, for a while, Facebook, Twitter’s much larger rival for advertising dollars. If Twitter also slips up, its shares could tumble fast, too.

“That’s always the peril of high-growth stocks,” said Lawrence Levine, a partner and a specialist in financial valuation at McGladrey, an accounting firm. “So much of the valuation is embedded in the expected growth rate.”

Via: NYT

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Twitter prices IPO at $26 per share

Twitter, the quirky 140 character messaging service that’s become a global phenomenon, priced its initial public offering at $26 per share, valuing the seven-year-old company at over $18 billion.

Twitter (TWTR) will raise $1.8 billion to fund future expansion by selling 70 million shares, which will open for trading on Thursday morning on the New York Stock Exchange. Some analysts say the shares are worth $50 or more, so the price could explode higher once trading begins.

Started in 2006 as a simple way to share short messages and status updates among friends, Twitter has grown to 232 million active users who post 500 million tweets per day about everything from personal thoughts to celebrity gossip and breaking news.

The deal is the highest profile Internet IPO since Facebook (FB) raised $16 billion last May. And Twitter could rank as the second-largest debut of a U.S. Internet company in history if it ultimately surpasses the $1.92 billion raised by Google (GOOG) in its 2004 IPO, according to Dealogic. Underwriters of the Twitter deal have the option to sell up to another 10.5 million shares, if needed, under a standard IPO clause called the greenshoe option, pushing the total value to over $2 billion.

Twitter and its Wall Street underwriters led by Goldman Sachs (GS) are hoping the deal goes smoother than Facebook’s IPO last year. Facebook shares faced delayed trading due to technical glitches, then couldn’t hold above the IPO price of $38 due to oversupply and doubts about the company’s mobile strategy.

Via: Yahoo Finance
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TWITTER BOOSTS IPO PRICE RANGE

Twitter's confidence appears to be increasing ahead of its initial public offering set for later this week.

The 7-year-old short messaging service on Monday boosted the price range for the IPO, saying that it now expects to price its shares at between $23 and $25 each. It previously planned to sell the shares for between $17 and $20 each.

At its new range, the IPO could raise more than $2 billion.

The increase doesn't come as a big surprise. Many observers considered the previous pricing to be relatively conservative, given that Twitter is poised to pull off the year's hottest IPO. And some predicted that rather than set its expectations too high; the company would likely raise its pricing in the days leading up to the IPO.

Twitter said in its regulatory filing that it still plans to sell 70 million shares. If all of those shares are sold, the offering's underwriters can buy another 10.5 million shares.

At the $25 share price, Twitter's market value would be around $15.6 billion. Twitter's value is based on 625.2 million outstanding shares expected after the offering, including restricted stock units and stock options.

Some analysts had expected that figure to be as high as $20 billion. But Twitter's caution suggests that the company learned from Facebook's rocky IPO last year.

Facebook's IPO was marred by technical glitches on the Nasdaq Stock Exchange in May of 2012. As a result, the Securities and Exchange Commission fined Nasdaq $10 million, the largest ever levied against an exchange. Those problems likely led Twitter to the New York Stock Exchange.

The San Francisco-based company plans to list its stock under the ticker symbol "TWTR" on the NYSE. Twitter will begin trading on the NYSE on Thursday morning after setting a price for its IPO sometime Wednesday evening.

Via: Breitbart
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