Should you invest in Twitter?
Twitter’s 135-character tweet announcing its intention to float sent the tech world in a tizzy yesterday. Within hours it got over 12,800 tweets and 1,700 favourites.
“We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale,” the social media giant tweeted.
The IPO, widely reported to be held in the first quarter of 2014, is expected to value the company at $10bn.
Last year, when Facebook debuted on the stock market for $104bn (£66.2bn), its share price quickly nosedived and has only recovered this summer.
In fact, when asked what advice he would like to give Twitter for its IPO, Mark Zuckerberg, said: “I’m kind of the person you want to ask last about how to make a smooth IPO.”
So the big question here is should you invest in Twitter? Although its early days, here’s what analysts have to say:
Alessio Rastani, the trader who told the BBC that Goldman Sachs rules the world: “Investing in Twitter is like flushing money down the toilet”
“I think you should buy Twitter shares if you like flushing your money down the toilet! Investors don’t seem to ever learn the curse of web IPOs as with Groupon, Facebook and Zynga. Back in May 2012 I warned investors about the risk of buying Facebook IPO. I was right to say it was “muppet bait” and Facebook shares collapsed 50%.”
“Instead of buying Twitter shares, keep your money and invest it in less risky stocks of world-dominated brands that pay you dividends such as: Coca Cola, Walmart, Microsoft and Intel. Twitter may be hip and popular now, but as with anything in technology, they are at the mercy of competition, advances in tech and consumer sentiment. Look what Google did to Yahoo and how Apple has been superceded by Samsung. I give the twitter IPO 10 out of 10 on the “dumb investment of the year” meter.”
Trip Chowdhry, analyst at Global Equities Research: ‘Twitter is undermining confidence by keeping its finances private’
“The idea of doing a confidential IPO undermines the credibility of the Twitter IPO. If they are not transparent, it is that they have something to hide; we know nothing of how their company has been going for the last two years.”
Leo Kelion, BBC technology reporter : ‘Prepare for scrutiny, Twitter’
“Twitter’s flotation was long expected but is only likely to increase scrutiny of the company.
“The firm will be mindful of the extra scrutiny Facebook endured after its flotation. Twitter users will also be on guard against the idea that pressure from investors could see them made subject to more adverts.
“Investors meanwhile may be concerned about churn – the idea that people join and then drop out. Innovation may be the answer to that, with Twitter’s new music discovery service and ways of viewing conversations with others being possible solutions.”
Roger Kay, founder, Endpoint Technologies Associates: ‘Twitter should educate users about ads’
“When they [Twitter] price the stock, the price will be based on something more than hopeful dreams. If they start to put ads in, it’s going to change the user experience. They haven’t educated their users to accept the presence of ads.”
David Pakman, a New York-based partner at Venrock Inc, told Techcrunch: ‘Twitter will try to avoid Facebook IPO follies’
Twitter will do everything they can to avoid anything that looks like the Facebook IPO, both on the expectations front and the execution front. By the confidential filing, it will hopefully be able to keep expectations down a bit, and hopefully use a different pricing strategy than Facebook.”
And here’s our round-up of best Twitter reactions for Twitter float:
We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.
— Twitter (@twitter) September 12, 2013
From “that’s the dumbest idea I’ve ever heard of” to “no one outside tech will ever use that” to “that will never make any money” to IPO.
— MG Siegler (@parislemon) September 12, 2013
.@twitter Super confidential, guys.
— Ben Schaechter (@Bensign) September 12, 2013
— SynergyMX.com (@synergymx) September 13, 2013
News sites using Twitter to report on Twitter’s IPO. #Tweetception
— Austin Fortner (@AustinFortner) September 12, 2013
Dear Twitter…Examine closely the Facebook IPO and do the exact opposite. #TwitterIPO
— Paul Cwalina (@PKC1963) September 12, 2013