Much abuzz about Twitter: Shares double after hitting NYC floors
The Twitter logo is displayed on a banner outside the New York Stock Exchange (NYSE) on November 7, 2013 in New York City. (Andrew Burton/Getty Images/AFP)
'TWTR' started trading in New York at $26 per share at 9:30a.m. EST and after just 20 minutes of trading, brokers were yelling '$40!' and '$44!'. Twitter shares will remain volatile throughout the most anticipated internet company debut since Facebook.
Big energy and enormous trade transactions flooded the New York Stock Exchange (NYSE) early Thursday morning as Twitter Inc., a company that isn't even profitable yet but is valued by its IPO at $14.1 billion, nearly doubled share prices in the opening minutes of public trading.
Trading throughout the day could remain volatile, as the San Francisco-based micro blogging company started bidding high- with a set price of $26.00 for 70 million shares.
The NYSE has live coverage of the opening on its website.
Journalists outnumbered traders on the floors at the third largest IPO in the US this year, after a nine-year old girl (who herself has a Twitter account) a member of the Boston Police Department, and actor Patrick Stewart from Star Trek, rank the opening bell.
Twitter will rely on investor desire to buy into the hot social media which has promising revenue, but is too heavily reliant on advertising, isn't yet profitable, and at any moment, could be eclipsed by 'the next big thing'.
CEO Dick Costolo, Twitter’s third CEO in 3 years, said he ‘wouldn’t change anything’ about the IPO process which took an ‘anti-Facebook’ approach, and avoided its predecessors’ mistakes of too much hype and overestimation.
The initial public offering was priced at $26.00, higher than the original pitch of $17.00, and even higher than the final anticipated range of $23.00-$25.00. The $26.00 share price decision raised $1.82 billion in the initial public offering, giving the company a value of $18.3 billion.
To avoid a similar slip-up at Facebook's IPO, when a technical glitch caused delays, the NYSE did a test run for Twitter, predicting trading scenarios to make sure systems could withstand heavy investor traffic.
Its third quarter revenue was $422.2 million. In 2012 revenue almost tripled and reached $317 million. The company filing predicts sales will hit $1 billion in the next year.
If all shares are sold, there will still be 554.7 million outstanding, as well as 10.5 million shares the underwriters have an option to buy later. That will give it a basic market capitalization of about $14.4 billion.
The eight-year-old service only gave potential investors a first peek into its financial records when it released its prospectus in a Security Exchange Commission (SEC) filing on October 3 2013, nearly a month after Twitter announced it confidentially filed for in IPO on September 12.
The IPO will transform top shareholders into instant billionaires.
Jack Dorsey, the founder and chairman holds 4.9 percent or 23.4 million shares in the company. Other shareholders include Evan Williams, co-founder with 12 percent, or a 59.6m share stake, Peter Fenton, a Benchmark Capital partner with 6.7 percent, and CEO Costolo with 1.6 percent.
All capital raised on Thursday will go straight back into the company, Costolo said. IPO money will be used for blazing international expansion. About 77 percent of users are international, yet the firm still makes 75 percent of its revenue inside the US. Ad space ‘per timeline view’ inside the US costs $2.58, and internationally, only $0.36.
Twitter was launched by CEO Jack Dorsey on March 21, 2006 with just 24 characters, when he tweeted, "just setting up my twttr." It has so far attracted more than 230 million users worldwide and become one of the most popular ways to share information online. It has become a uniquely live way to share information that newsrooms, protestors, and public figures use to transmit information in real time. Katy Perry has the most 'Twitter capital' - with 46.5 million followers, 7 million more than President Obama,
Goldman Sachs was listed as the main underwriter, along with Morgan Stanley, JPMorgan Chase & C., Bank of America Corp., Deutsche Bank, AG, Allen & Co., and Code Advisors.