Coming up with IPO of one’s own company is dream of every organization aspiring to make big. Twitter, one of the leading social networking website had come up with their IPO for 2013 which differed from that of 2012 in terms of public response as well as the offerings.
They took every possible step to safeguard the future of their IPO and avoid facing debacle faced by Facebook. To the joy of Twitter, it sold out 70 million shares each of value $26 with things looking rosy for the company. We all agree that this field is highly competitive, yet they have managed to steer clear the initial competition of IPO. Yet Twitter has to put in more efforts to justify the valuation provided by the investors. Here are some points that helped Twitter’s IPO takeover that of Facebook:
1. Twitter’s IPO did not needed banker buying. They did not required their bankers’ aid to trade above its IPO price. It showed on the first day of trading itself with closing done well above it. Comparatively in 2012, Morgan Stanley had to buy Facebook stock to keep its value above $38.
2. Twitter’s CEO Dick Costolo took a different route before coming up with their IPO of 2013. He and the company’s founder showed up in lower Manhattan before opening it on the NYSE.
3. Twitter showed up its IPO for 2013 on-time which paved way for smooth trading, thus there was no stock market malfunction.
4. Twitter choose not to upsize its IPO when the demand rose. However they do increased its prices. The company managed to generate $1.8 billion and IPO earned a valuation of $14.4 billion for Twitter. It was tiny in comparison to Facebook, but working well.
5. Twitter is going to hold on the money generated by its IPO and use it for corporate purposes, capital expenditures or save it for any future needs of the company. Thus the profit went straight to the company’s pocket barring the early shareholders. I would say good strategy and very clever!
6. Goldman Sachs was the choice of Twitter as their lead underwriter of IPO. The big silicon valley IPOs have always led by Morgan Stanley but here Goldman Sachs was the company’s preference. Goldman prevented the passing of offerings out of the reach of retail investors and hedge funds.
7. Twitter lost almost $133.9 million in the 1st nine months of 2013. Yet the company choose to show up its IPO at early stage of its growth path. This improves the prospects of Twitter meeting high investor expectations.
8. Twitter’s stock scored big on the IPO day. The shares opened at $45.10 and went up by 75% in morning trading itself. Thus the Wall street fans of Twitter received new constituency. Here it also implies that millions of dollars were left on the table which the company needs to look after in the future.