Twitter can take IPO lessons from Facebook -- on what not to do
Facebook's feeble offering offers a cautionary tale on how not to take a popular company public
Computerworld - As Twitter gears up for an initial public offering, its executives should study Facebook's path to an IPO to learn what not to do.
Twitter made its IPO plans official last week by filing S-1 documents with the U.S. Securities and Exchange Commission.
The social network is now preparing for its financial roadshow, where it hopes to woo skeptical Wall Street investors.
The frenzy that initially surrounded Facebook's initial public offering in May of 2012 quickly cooled once trading began -- the share price ended the day as it started. In the days and months that followed, the first day's result would have been adequate as the share price sank well below its initial offering price of $38 a share over time.
The world's largest social network hit its low point last September when the stock hit $17.55 per share
It took more than a year for Facebook's shares to return to the opening day price. The company's strengthening mobile position is credited with boosting the Facebook's financial profile in recent months.
"I think Twitter is gun shy from Facebook's IPO," said Jeff Kagan, an independent analyst. "Facebook didn't take it seriously. [Mark] Zuckerberg showed up in a sweatshirt at investor meetings. That was insulting. They thought they were bulletproof and then found out they weren't."
Millions of users love social networks and the chance to update friends and family with posts and tweets about weekend fun, political issues and their thoughts on the big game.
Investors, though, don't care about retweeting jokes and posting Vine videos. They only care about making money.
Last month, Facebook CEO and co-founder Mark Zuckerberg laughed when asked at TechCrunch's Disrupt conference what advice he had for Twitter executives as they readied for an IPO. "It's funny on its surface because I'm the last person you'd want to ask how to make a smooth IPO," he said. "It's a valuable process."
Analysts say Twitter executives can learn from mistakes Facebook made during and after its IPO period.
For instance, investor enthusiasm and confidence in Facebook waned quickly when Facebook set an opening price of a beefy $38 per share. Facebook also increased the size of its IPO by about 85 million shares days before its IPO, another factor in the IPO debacle.
"Twitter needs to learn not to be too full of itself," said Kagan. "I'd rather see them come in lower with a stock price than higher. Investors will be more satisfied if they buy low and then increase, rather than fight an uphill battle for a whole year, generating stories about whether this company will survive or not."
- Twitter's slipping user growth spooks investors
- Get ready to tweet your questions for Twitter's first earnings call
- Super Bowl sets Twitter record, as Volkswagen launches social war room
- Perspective: Twitter's success opens up IPO pipeline
- Update: Twitter goes public at $45 a share
- With IPO cash influx, Twitter could be bigger threat to Facebook
- Ahead of IPO, Twitter shines up multimedia image
- Twitter kicks off pre-IPO investor roadshow
- As its IPO looms, Twitter faces investor grilling
- Twitter experiments with 'Event Parrot' -- a news delivery service
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
Changing the Way Government Works: Four Technology Trends that Drive Down Costs and Increase Productivity
This paper discusses four technology-based approaches to improving processes and increasing
productivity while driving down department and agency costs.
- Aberdeen Group: Marketing Analytics for Manufacturing: Forging Customer Insights There are no recalls for poor marketing. Manufacturers need to get their customer intelligence and messaging right the first time. Learn how.
- The Brave New World of Customer-Centric Manufacturing The Unique Opportunity for Manufacturers to Better Understand their Consumers
- See the Possibilities Utilizing Data Visualization Do you simply want to collect data, or do you want to derive business insights from it? What if you could quickly and...
- Webinar: Building a Big Data solution that's production-ready Big data solutions are no longer just a nice-to-have.
- Meg Whitman presents Unlocking IT with Big Data During this Web Event you will hear Meg Whitman, President and CEO, HP discuss HAVEn - the #1 Big Data platform, as well... All IT Industry White Papers | Webcasts