Darlene Le Corporate Finance MWF Twitter IPO Topics & Discussions 1. What is an IPO?

An initial public offering, or IPO, is the first sale of stock by a company to the public. A company can raise money by issuing either debt or equity. If the company has never issued equity to the public, it's known as an IPO. 2. Why go public? Going public usually raises a large amount of cash. Being publicly traded also opens many financial doors because of the increased scrutiny; public companies can usually get better rates when they issue debt. As long as there is market demand, a public company can always issue more stock. Thus, mergers and acquisitions are easier to do because stock can be issued as part of the deal. Trading in the open markets means liquidity. This makes it possible to implement things like employee stock ownership plans, which help to attract top talent. 3. What is Twitters market value? At Twitter's closing price on Thursday, the seven-year-old company had a total market value of more than $25 billion, making it worth more than companies such as Kellogg, Netflix and Whole Foods and twice the value of iconic aluminum giant Alcoa. 4. When did Twitter go public, and how much was its IPO value? Shares of Twitter surged on their first day of trading on the New York Stock Exchange (NYSE) on Thursday, under the ticker symbol "TWTR." The company and its underwriters, led by Goldman Sachs, on Wednesday evening had set a starting price for the stock of $26. That price didn't last a millisecond: The stock started trading at $45.10, jumped as high as $50 and ended its first trading day at $44.90 -- a 73 percent gain. 5. How did Twitters IPO do compared to Facebook? The tone of the coverage of Twitters I.P.O. has been strikingly cheerful. David Gelles of the Times said Twitter had managed to avoid the missteps that marred Facebooks initial public offering last year. Alistair Barr of USA Today called the I.P.O. a huge success. Facebook overpriced its IPO back in May 2012 opening at $38 a share, after which the companys shares lost much of their value.

6. What if Im not an investor? What does this mean for the average twitter user? Twitter users will see more advertisements on their timeline, like Facebook and Instagram, both on the web and on mobile devices. With recent visual enhancements, advertisements will become more predominant and readily seen in the future. There will be more promoted tweets, suggestions on who to follow and advertisers can also place trends worldwide. 7. Who benefits from underpriced IPOs? Of course those investors who buy shares at the offer price are the beneficiaries since they then can sell when the price goes up. Bankers offer first dibs on those shares to favored investors, often their own clients. The banks that underwrite the offering can also reap rewards. In direct revenue from the Twitter I.P.O., Goldman Sachs and other underwriters will share nearly sixty million dollars. But they may also benefit indirectly from the underpricing, if happy clients return the favor in the form of new business. Underwriters have sometimes benefited more directly from helping clients invest in underpriced I.P.O.s. The S.E.C. in 2002 charged Credit Suisse First Boston for helping clients invest in underpriced I.P.O.s that the bank underwrote, and then demanding that those clients return a portion of their I.P.O.s profits in the form of commissions. 8. Who reaps the most rewards from the IPO launch? Twitter co-founder Evan Williams, owner of the largest stake in the company, will reap the most rewards from the IPO launch. He's expected to rake about $1.5 billion. If the stock price doubles, fellow co-founder and Square CEO Jack Dorsey would join Williams in the billionaires club. On March 21, 2006, Dorsey posted the world's first tweet: "Just setting up my twttr." 9. What is Twitters ultimate goal in going public? Twitter currently has over 250 million users, with a rapid growth over the last quarter. The average Twitter user checks their account 7.5 times a day. When you boost the platform publically, it brings more brand awareness as a public company. Going public reaches a broad audience. Marketers are focusing on how to increase ways to keep current users engaged while bringing in new users. 10. Why are investors hesitant in buying shares? Even though Twitter allows users to tweet, share photos, news, etc., it has not figured out how to turn a profit and make money. It lost nearly $65 million in the quarter that ended in September, nearly three times the loss it suffered in the same quarter in 2012. Even before it started trading, Twitter was more expensive relative to its sales than Facebook, Bloomberg reported recently.