Jack Dorsey (left), Chairman and co-founder of Twitter Inc, with co-founders Christopher Isaac ‘Biz’ Stone (second left), Evan Williams (second right) and Twitter CEO Richard Costolo after Twitter stock opened for trading at the New York Stock Exchange yesterday.
NEW YORK: Twitter hit Wall Street with a bang yesterday, as an investor frenzy quickly sent shares surging after the public share offering for the fast-growing social network.
The shares shot up by more than 90 percent in early trade to as high as $50. At 1630 GMT, Twitter was still up 74 percent at $45.27 from the initial public offering (IPO) price of $26 per share set on Wednesday.
While some analysts cautioned about the fast-changing nature of social media, the debut led to a stampede for Twitter, known for its one-to-many messages of up to 140 characters.
The key Twitter founders attended the opening on the New York Stock Exchange, along with Star Trek actor Patrick Stewart and a nine-year-old girl who operates a lemonade stand.
“Honored to join @ev @jack @biz @dickc & the @Twitter team at their historic IPO this morning,” Stewart tweeted, referring to founders Evan Williams, Jack Dorsey, Biz Stone, and Twitter chief executive Dick Costolo.
“We have a lot of work ahead of us” Costolo told CNBC television from the floor of the stock exchange. “All the capital raised by this is going into the company.” Asked about Twitter’s growth potential, Costolo said, “It’s all about making it very simple and easy for new users to come to the platform... we all have examples of why this service can be useful to everyone on the planet.”
Cantor Fitzgerald analyst Youssef Squali was upbeat on the company, saying in a note to clients that “Twitter is based on a one-to-all, all-the-time broadcast distribution model, and as such, fulfills an unmet need”.
“This model is highly complementary to traditional media outlets (especially TV), and fulfills the need for up-to-the-minute, trending information in real time,” the note said. “The platform also benefits from positive network effects, with more activity on Twitter resulting in the creation and distribution of more content, which attracts more users, platform partners and advertisers, and so on.”
Twitter offered 70 million shares on the New York Stock Exchange, generating $1.82bn, and gave underwriters a 30-day option to purchase an additional 10.5 million shares. The IPO assigned a market value of around $14.4bn to the company whose messaging service has become a hugely popular tool for celebrities, journalists, political leaders and others.
With the over-allotment it should be the second-biggest tech IPO after Facebook’s $16bn effort last year and ahead of Google’s 2004 offer, which raised $1.92bn, according to research firm Dealogic. Depending on the outcome of the common stock offer to underwriters, between 12.8 and 14.5 percent of the company’s shares will be publicly traded. The rest is held by its founders and a handful of early investors.
Twitter has fast become engrained in popular culture but must still convince investors of its business model, having lost more than $440m since 2010.
But with 232 million users and growing, Twitter is expected to be able to reach profitability by delivering ads in the form of promoted tweets, and from its data analytics. The research firm eMarketer estimates Twitter will bring in $582.8m in global ad revenue this year, and nearly $1bn in 2014. AFP
