7 ms·

Twitter to offer 70M shares priced at $17-$20 to raise up to $1.4B in IPO

56 points by coloneltcb 13y ago

cperciva 13y ago
Several of the company’s directors and executives are sharing stock. Chairman Jack Dorsey is selling roughly .6 percent of the company and will own 4.3 percent after the offering — making his share worth around $434 million. Co-founder Evan Williams is selling 1.6 percent of the company and will own 10.4 percent after the offering. Williams will be worth just over $1 billion if the shares go at a median price of $18.50. CEO Dick Costolo will own 1.4 percent of the company after IPO. I don't see any sign that anyone is selling stock... these numbers are all consistent with 13% dilution due to Twitter issuing new stock.
- jpmattia 13y ago
  It looks like TC didn't look at the table in the S-1 correctly: http://edgar.sec.gov/Archives/edgar/data/1418091/000119312513409822/d564001ds1a.htm http://edgar.sec.gov/Archives/edgar/data/1418091/00011931251... (top of page 154) That page + the "Several of the company’s directors and executives are sharing stock" (sharing? These are shared shares as opposed to all those unshared shares) indicates not a lot of care went into the writeup.
c2 13y ago
It seems like the trend lately is to float a tiny amount of shares to the public. From my perspective this creates an artificial supply problem for the stock and makes higher valuations easier as you need less institutional buy in to maintain the price, and a few good quarters can result in disproportionate gains in the market. Can anyone comment on that or shed some light? As a potential investor, those factors make me shy away from these investments as it makes the stock more volatile to changes and puts the fate of the stock in a few large holders hands.
- waps 13y ago
  You could take it as another sign that the bubble is ending. If a company like twitter needs to do this to get valuation ...
- ChuckMcM 13y ago
  It worked really really well for Groupon. (Well for their key stockholders at least). But this is the key ... As a potential investor, those factors make me shy away from these investments as it makes the stock more volatile to changes and puts the fate of the stock in a few large holders hands. Good, you're being smart about it. Not everyone will be, there will be a number of people who say "Gee, Twitter is everywhere this is going to be a huge stock some day." and will jump in with both feet. Betting with their feelings rather than an analysis of the fundamentals. For someone to 'win big' you either need someone to 'lose big' or a lot of people to 'lose somewhat.' Once there is enough float for the market to balance out the real expectation of the company will emerge (positive or negative). As a potential investor I think buying it at $10 is probably reasonable and re-selling when it gets back to $20.
- cft 13y ago
  This is because all that the insiders need is to make their private shares public, i.e. liquid (notwithstanding officer's planned sales/insider restrictions). Potential liquidity of the insider's shares is the primary objective of a modern internet IPO, like Twitter's.
  - encoderer 13y ago
    I respectfully disagree. At a company like Twitter, the so-called "insiders" have been able to take plenty of money off the table. And in fact, I'm not totally sure what share (if any) of the offering is from shares held by officers and investors. Have you seen the data? Moreover, there is liquidity on the secondary market for Twitter like there was for FB, etc. I think the primary object here is to raise capital and lubricate M&A activity. And most companies have no secondary market, so an IPO really helps unlock value for the rank-and-file who aren't part of the Series-XYZ rounds. There are a lot of engineers and middle managers there who will be able to buy homes and lots of other nice toys not to mention diversify their net worth a little.
rpedela 13y ago
Unless I am reading the prospectus wrong, looks like they haven't made a profit yet and the losses are much larger this year than last. I find that troubling for a software company wanting to IPO.
- fizx 13y ago
  Neither Amazon nor Groupon were profitable at IPO, ostensibly because they were maximizing growth. I guess you just have to decide which you think Twitter is more like.
  - rpedela 13y ago
    True, but Amazon could easily be profitable. It is a matter of choice in their case and has been that way since the beginning if my memory serves. Jeff Bezos chooses to run the company more like a non-profit than a C-corp. On the other hand, Groupon never had a sustainable business model. Twitter seems like they could have a sustainable business model which is good, but I haven't seen much proof so far. When Facebook was not profitable for so many years, it was fairly obvious to me they had a path to profitability or sustainability (if they chose to act like Amazon). It is not obvious to me how Twitter will do this.
bluedevil2k 13y ago
It's interesting that Biz Stone, the face of Twitter for a few years, isn't listed on the prospectus as a large shareholder.
- gkoberger 13y ago
  He sold most of his stock when he left a few years ago, and owns about a tenth of one percent of the company now. http://nymag.com/daily/intelligencer/2013/10/where-is-biz-stone.html http://nymag.com/daily/intelligencer/2013/10/where-is-biz-st...
sliverstorm 13y ago
What is twitter going to do with $1.4B? Do they have some incredibly expensive investments planned? Companies offer stock as an investment opportunity to raise capitol. Right?
- danhak 13y ago
  That's one reason. Another reason is to provide liquidity to shareholders.
- joeblau 13y ago
  I think the main reason they are IPOing is that investors are done investing in the company. At that point, they have two options: Go public, or go out of business. IPO shifts the risk off of the VC's and onto everyones retirement/investment portfolios.
6thSigma 13y ago
Anyone planning on buying Twitter for around the IPO price?
- BaconJuice 13y ago
  Don't buy it during the initial hype. Wait it out. My 2 cents.
codex_irl 13y ago
This is probably a silly question - but can regular people buy Twitter stock as soon as trading begins? I am thinking of buying a very small number of shares & "gifting" them to my sister - a super user of their service..more for novelty than as part of any serious investment strategy.
- cmbaus 13y ago
  Of course, but you won't know what the price will be until the shares start trading. If there is a lot of demand, they could be priced higher than the offer price.
- allsystemsgo 13y ago
  Doubtful that you'd get it at the IPO price.
unabridged 13y ago
$11B seems like a low valuation. Groupon is still worth $6B and I don't think its anywhere near half as valuable as twitter. Twitter does have a problem trying to monetize the core business, the only way seems to be to charge celebrities and businesses to send out tweets(advertisements) but that will probably hurt them a lot. But with all that data and all those users and celebrities there is so much possibility and directions it can go. If I owned them the front page would be all entertainment news, hire bloggers to scan through tweets and write stories about the latest gossip. Why let tmz and other entertainment news get all the ad revenue by writing about the info coming directly out of your site, twitter should be the #1 webpage for celebrity news/gossip. The kind of people who really use twitter are obsessed with this garbage, it seems only natural.
- nonchalance 13y ago
  They may have been advised to be a bit more conservative, given how FB IPO went
  - phillmv 13y ago
    Well… the FB IPO went great for existing (vested) stockholders. If your stock doubles immediately after going public, you just lost a ton of money and were probably grifted by your market-maker.
    - unabridged 13y ago
      For famous companies that are already in the public mind I have no idea why they go the traditional IPO route (I'm not sure what SEC/market regulations require). Why not something like offer 10k shares at a $100B valuation see if anyone bites? Then go to $90B, and so on until you sell your entire offering. There is so much dead money out there that would buy $20 shares of twitter for any insane valuation and they are just leaving it on the table.
      - nonchalance 13y ago
        Google tried something similar with the reverse dutch auction
knodi 13y ago
Was expecting more like $8-$12 not this high.
yeukhon 13y ago
Average consumers like us can't buy stock right?
- theatrus2 13y ago
  The point of an IPO is to offer stock to the public. Once its on the market, anyone can.

56 points by coloneltcb 13y ago

Several of the company’s directors and executives are sharing stock. Chairman Jack Dorsey is selling roughly .6 percent of the company and will own 4.3 percent after the offering — making his share worth around $434 million. Co-founder Evan Williams is selling 1.6 percent of the company and will own 10.4 percent after the offering. Williams will be worth just over $1 billion if the shares go at a median price of $18.50. CEO Dick Costolo will own 1.4 percent of the company after IPO. I don't see any sign that anyone is selling stock... these numbers are all consistent with 13% dilution due to Twitter issuing new stock.

jpmattia 13y ago
It looks like TC didn't look at the table in the S-1 correctly: http://edgar.sec.gov/Archives/edgar/data/1418091/000119312513409822/d564001ds1a.htm http://edgar.sec.gov/Archives/edgar/data/1418091/00011931251... (top of page 154) That page + the "Several of the company’s directors and executives are sharing stock" (sharing? These are shared shares as opposed to all those unshared shares) indicates not a lot of care went into the writeup.

c2 13y ago

It seems like the trend lately is to float a tiny amount of shares to the public. From my perspective this creates an artificial supply problem for the stock and makes higher valuations easier as you need less institutional buy in to maintain the price, and a few good quarters can result in disproportionate gains in the market. Can anyone comment on that or shed some light? As a potential investor, those factors make me shy away from these investments as it makes the stock more volatile to changes and puts the fate of the stock in a few large holders hands.

waps 13y ago
You could take it as another sign that the bubble is ending. If a company like twitter needs to do this to get valuation ...
ChuckMcM 13y ago
It worked really really well for Groupon. (Well for their key stockholders at least). But this is the key ... As a potential investor, those factors make me shy away from these investments as it makes the stock more volatile to changes and puts the fate of the stock in a few large holders hands. Good, you're being smart about it. Not everyone will be, there will be a number of people who say "Gee, Twitter is everywhere this is going to be a huge stock some day." and will jump in with both feet. Betting with their feelings rather than an analysis of the fundamentals. For someone to 'win big' you either need someone to 'lose big' or a lot of people to 'lose somewhat.' Once there is enough float for the market to balance out the real expectation of the company will emerge (positive or negative). As a potential investor I think buying it at $10 is probably reasonable and re-selling when it gets back to $20.
cft 13y ago
This is because all that the insiders need is to make their private shares public, i.e. liquid (notwithstanding officer's planned sales/insider restrictions). Potential liquidity of the insider's shares is the primary objective of a modern internet IPO, like Twitter's.
- encoderer 13y ago
  I respectfully disagree. At a company like Twitter, the so-called "insiders" have been able to take plenty of money off the table. And in fact, I'm not totally sure what share (if any) of the offering is from shares held by officers and investors. Have you seen the data? Moreover, there is liquidity on the secondary market for Twitter like there was for FB, etc. I think the primary object here is to raise capital and lubricate M&A activity. And most companies have no secondary market, so an IPO really helps unlock value for the rank-and-file who aren't part of the Series-XYZ rounds. There are a lot of engineers and middle managers there who will be able to buy homes and lots of other nice toys not to mention diversify their net worth a little.

rpedela 13y ago

Unless I am reading the prospectus wrong, looks like they haven't made a profit yet and the losses are much larger this year than last. I find that troubling for a software company wanting to IPO.

fizx 13y ago
Neither Amazon nor Groupon were profitable at IPO, ostensibly because they were maximizing growth. I guess you just have to decide which you think Twitter is more like.
- rpedela 13y ago
  True, but Amazon could easily be profitable. It is a matter of choice in their case and has been that way since the beginning if my memory serves. Jeff Bezos chooses to run the company more like a non-profit than a C-corp. On the other hand, Groupon never had a sustainable business model. Twitter seems like they could have a sustainable business model which is good, but I haven't seen much proof so far. When Facebook was not profitable for so many years, it was fairly obvious to me they had a path to profitability or sustainability (if they chose to act like Amazon). It is not obvious to me how Twitter will do this.

bluedevil2k 13y ago

It's interesting that Biz Stone, the face of Twitter for a few years, isn't listed on the prospectus as a large shareholder.

gkoberger 13y ago
He sold most of his stock when he left a few years ago, and owns about a tenth of one percent of the company now. http://nymag.com/daily/intelligencer/2013/10/where-is-biz-stone.html http://nymag.com/daily/intelligencer/2013/10/where-is-biz-st...

sliverstorm 13y ago

What is twitter going to do with $1.4B? Do they have some incredibly expensive investments planned? Companies offer stock as an investment opportunity to raise capitol. Right?

danhak 13y ago
That's one reason. Another reason is to provide liquidity to shareholders.
joeblau 13y ago
I think the main reason they are IPOing is that investors are done investing in the company. At that point, they have two options: Go public, or go out of business. IPO shifts the risk off of the VC's and onto everyones retirement/investment portfolios.

6thSigma 13y ago

Anyone planning on buying Twitter for around the IPO price?

BaconJuice 13y ago
Don't buy it during the initial hype. Wait it out. My 2 cents.

codex_irl 13y ago

This is probably a silly question - but can regular people buy Twitter stock as soon as trading begins? I am thinking of buying a very small number of shares & "gifting" them to my sister - a super user of their service..more for novelty than as part of any serious investment strategy.

cmbaus 13y ago
Of course, but you won't know what the price will be until the shares start trading. If there is a lot of demand, they could be priced higher than the offer price.
allsystemsgo 13y ago
Doubtful that you'd get it at the IPO price.

unabridged 13y ago

$11B seems like a low valuation. Groupon is still worth $6B and I don't think its anywhere near half as valuable as twitter. Twitter does have a problem trying to monetize the core business, the only way seems to be to charge celebrities and businesses to send out tweets(advertisements) but that will probably hurt them a lot. But with all that data and all those users and celebrities there is so much possibility and directions it can go. If I owned them the front page would be all entertainment news, hire bloggers to scan through tweets and write stories about the latest gossip. Why let tmz and other entertainment news get all the ad revenue by writing about the info coming directly out of your site, twitter should be the #1 webpage for celebrity news/gossip. The kind of people who really use twitter are obsessed with this garbage, it seems only natural.

nonchalance 13y ago
They may have been advised to be a bit more conservative, given how FB IPO went
- phillmv 13y ago
  Well… the FB IPO went great for existing (vested) stockholders. If your stock doubles immediately after going public, you just lost a ton of money and were probably grifted by your market-maker.
  - unabridged 13y ago
    For famous companies that are already in the public mind I have no idea why they go the traditional IPO route (I'm not sure what SEC/market regulations require). Why not something like offer 10k shares at a $100B valuation see if anyone bites? Then go to $90B, and so on until you sell your entire offering. There is so much dead money out there that would buy $20 shares of twitter for any insane valuation and they are just leaving it on the table.
    - nonchalance 13y ago
      Google tried something similar with the reverse dutch auction

knodi 13y ago

Was expecting more like $8-$12 not this high.

yeukhon 13y ago

Average consumers like us can't buy stock right?

theatrus2 13y ago
The point of an IPO is to offer stock to the public. Once its on the market, anyone can.