Twitter Inc (NYSE:TWTR) went public today to great aplomb. The company opened at $45.10 this morning, far above the $26 list price the company offered. In the run up to the release of Twitter shares to the public, much of the narrative compared the company’s offering to that of Facebook Inc (NASDAQ:FB).
That comparison was justified in some ways. Both of the companies are in the social media space, both are looking to earn money from advertising and both are valued at exceptionally high levels. Twitter Inc (NYSE:TWTR) is now public. It’s time to take a look at how the IPO compared to the Facebook Inc (NASDAQ:FB) affair.
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Facebook IPO vs Twitter IPO
There are a few major factors to consider in how an IPO performed. The first is the behavior of the company. Twitter’s approach to this morning’s IPO could be called more professional and less promotional than the Facebook Inc (NASDAQ:FB) IPO.
Twitter Inc (NYSE:TWTR) valued its stock at a price below what the market could bear. When Facebook Inc (NASDAQ:FB) went public the banks that underwrote its offering were forced to buy up shares in order to keep the value of the stock above the price the company went public at.
The fall in Facebook Inc (NASDAQ:FB) shares could be attributed, in part, to the massive problems that the Nasdaq exchange had on opening day. The Twitter Inc (NYSE:TWTR) IPO saw no noticeable glitch in the functioning of the New York Stock Exchange. The IPO was handled smoothly and Twitter will not suffer from the same kind of cloud that followed Facebook for months after its IPO.
Another difference was the direction the money flowed this morning. No private Twitter Inc (NYSE:TWTR) sold shares in the company in the IPO. All of the shares were created for the offering, and all of the money, minus fees and other expenses, went directly to the company. In the Facebook Inc (NASDAQ:FB) IPO some private investors sold part of their holding, and the money went to them.
Facebook vs Twitter IPO performance
The biggest difference that investors will notice is the performance of the Twitter IPO compared with the Facebook Inc (NASDAQ:FB) offering. Twitter Inc (NYSE:TWTR) listed for IPO at a price of $26, but shares in the company sold for much more than that when the company went public. Shares opened at $45.10 and traded at highs of above $50 for a brief period.
Facebook Inc (NASDAQ:FB) early buyers were not so lucky. The world’s biggest social network saw its stock stay just above list price on the day it opened, helped by hefty support from the big institutions that underwrote the offering. Investors will be more pleased with the Twitter Inc (NYSE:TWTR) IPO.
A 70% bump in the value of the company means that Twitter Inc (NYSE:TWTR) could have taken millions of dollars home today. The IPO was not a disaster like that of Facebook Inc (NASDAQ:FB), but the movements show that it was not all that efficiently priced.