How Twitter Inc. (NYSE:TWTR) Overshadowed Facebook Inc. (NASDAQ:FB)?
Where the destabilizing technical hitches plagued Facebook Inc. (NASDAQ:FB)’s IPO back in 2012, care was taken for seamless transactions during the launch of Twitter Inc. (NYSE:TWTR)’s IPO yesterday which soared as much as $50.09 or more than 92.5% compared to its offer price of $26. The shares of Twitter ended the session at $44.90 or with 72.7% gains on the opening day. However on the one hand where Twitter outshined on its launch day, it was not so good day for tech stocks or even for social media stocks. The Morgan Stanley High-Tech Index (INDEXNYSEGIS:MSH) fell around 1.61% and the stocks of social media giants Facebook Inc. (NASDAQ:FB) fell 3.18% while that of LinkedIn Corp (NYSE:LNKD) fell 4.22%.
Talking about Facebook v/s Twitter IPO, the latter’s approach seemed more professional compared to the FB’s more hyped, promotional approach. Another thing that concerned much about FB IPO was Morgan Stanley, the lead underwriter, priced the stock at much generous multiple and raised the IPO price. Moreover the insiders dumped the stock to extract most out of the IPO trade. Moreover the falling growth, uncertainty about company’s business model and challenges posed by mobile transitions were also partly contributed the FB stock to trade below its offering price for most of the times.
In case of Twitter IPO, all of the shares meant for offering and all the money went directly to the company, after deducting fees and other related expenses. However Twitter is unprofitable and even though its approach benefits prospective investors, whether it will really benefit the early investors remain uncertain. Its valuation will depend much on its future strategies and business growth and if the business loosens, its value could plunge before long term investors could even get their investments out.
Assistant Managing Editor of CNNMoney, Paul R. La Monica favored Facebook from the investment perspective and commented, “Facebook wasn’t always profitable. But it was by the time it decided to go public. And Twitter’s losses are growing, not shrinking.”