Twitter (TWTR) begins trading! Still going up! $100??

Twitter has opened trading with a bang like no other, with an opening that didn’t show any of the trouble that facebook saw Twitter has almost doubled at the start of trading. Within minutes of the opening “print,” the shares climbed and cracked the $50 mark, up more than 91% from Wednesday, before dropping to between $45 and $46. The low point ibeing $44.

Wedbush analyst MichaelPachter says high debut price suggests the Twitter IPO was managed well and ‘clearly shows that demand exceeds supply of shares.’ He added that it’s impossible to know what the real value is but still acknowledged that the price is ‘pretty high’ and not something he was expecting. In the most hotly anticipated technology stock market listing since Facebook last year, Twitter was expected to sell shares for up to $26 (£16), valuing the group at up to $18billion (£11.2billion). After the bell is rung, the stock market goes through ‘price discovery’ which is where the market determines how much shares will cost. This took about an hour in Twitter’s case.

How to Profit off the Twitter IPO

A lot of people are asking how they can get access to Twitter shares either now or at the time of the IPO. Basically unless you have connections you won’t have IPO access, but other means are available to get exposure.

It’s been mentioned in other blogs and articles that GSV Capital (GSVC), a publicly traded venture capital firm is a good way to get exposure to Twitter (amongst many other tech firms).

Basically the fund is made up of around 10-15% of Twitter shares and through buying GSVC you will have that exposure. Given the rest of the GSVC are similar tech companies which will likely increase in value now and at the time of the Twitter IPO I’d expect it’s not bad method of getting Twitter exposure. GSVC is by no means expensive if you believe the Twitter IPO will be successful.

Twitter release IPO details – S-1

The Twitter IPO —the most anticipated IPO since Facebook has now gotten even more real after Twitter released its S-1, which is basically giving investors an opportunity to view the books.

What the S-1 tells us is that is:

  • Twitter has finally given us an idea about revenues and profitability. Basically it seems they have revenue but not profit, usual story for a dot com IPO.
  • $316.9 million were Twitters 2012 revenues, almost triple what it brought in the previous year.
  • $79.4 million loss, Twitter again posted a loss but it was almost 40% less than 2011.
  • Sales estimates for Twitter of $600 million in 2013 and $1 billion in 2014.

Other things to consider

  • The business model of Twitter seems solid, at least more so than usual dot com IPOs (including Facebook)
  • Corporate engagement with Twitter is strong, Twitter view partnerships above simple advertisement engagement.

Twitter IPO Share Price Prediction

Insiders say that twitters privately held shares are trading for around $16-$30 – it has been reported in the NY Times that Twitters own employees were taken by surprise by the announcement.

The private market or secondary market that only insiders have access to has been quite active in recent times – Firsthand Tech Value Fund has bought more than one million Twitter shares at an average of $17 per Twitter share. This values Twitter at around $9 billion. More recently however the secondary trading of twitter shares has risen into the   $20 and $30 range placing a higher value of $15 billion to $16 billion. A $20 billion valuation would place Twitter at around 20 times revenue, similar to Facebook and LinkedIn.