Twitter goes public, initial IPO reaction is positive

The tweet that announced that Twitter's shares were trading on the NYSE
The tweet that announced that Twitter’s shares were trading on the NYSE

Twitter listed on the New York Stock Exchange (NYSE) under the ticker TWTR with shares opening trading at $45.10 and closing at $44.90. That was a rise of over 70% over the initial share trading price of $26 which was arrived at as a more modest figure that will make sure there is room to go up without running the risk of having shares threaten to sell at below the initial pricing as was the case with Facebook a year ago.

Facebook, which made between 85-87% of its profits in the last one year from advertising is banking on the IPO to raise some more cash as it looks to the future. With its 230 million users, Twitter’s user-base would be the fifth largest country in the world, just several millions above Brazil and this bonds well for the company’s future as any investor can see that it still has massive room to grow.

In contrast, other tech companies like Facebook and Google listed on the stock exchange when they were serving a huge user base. Facebook for instance currently boosts of over 1 billion users and had around 900 million users at the time of its listing.

Twitter has been cautious about going public with the company visibly taking all the necessary steps to ensure a repeat of the 2012 Facebook IPO does not happen. The company engaged the services of underwriter Goldman Sachs and not Morgan Stanley as was the case with Facebook. Also, it listed on the friendly (to Twitter) NYSE instead of Nasdaq where tech and internet companies tend to list. The likes of Apple, Google and lately Facebook are all listed on Nasdaq.

To be more strategic in its offerings, the company only floated 70 million shares with over half of them going to long term holders hence ensuring some solidity not a situation where the shares are widely sold as soon as the 180-day period holding out is over. This is expected to help keep the share price well above the initial $26 pricing and not be a repeat of the disaster that happened with Facebook’s shares.

Facebook founders, employees, investors and venture capital firms gained a lot from the IPO as their shares in the company are now valued highly. Co-founders Evan Williams, Biz Stone, Jack Dorsey and current CEO Dick Costolo for instance have added several billions to their accounts thanks to the IPO.