Twitter is destined for an IPO some time in the coming months and comparing the firm’s offering to Facebook Inc (NASDAQ:FB) is all the rage. The company operates in the same space as Facebook, and that company’s offering left an almost indelible impression on the psyche of the average investor. Over at Fortune on CNN Money today, Joshua Morgan Brown of the Reformed Broker took a look at those comparisons.
Brown says that the Twitter IPO will be nothing like the Facebook Inc (NASDAQ:FB) IPO of 2012. He admits that he plans on buying shares in the company for the long-term in the secondary market, and goes on to mourn the lazy nature of all the journalism comparing the Facebook IPO to Twitter.
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Facebook Twitter disconnect
“What happened with Facebook in May of 2012 has no bearing on what will or won’t happen with Twitter,” wrote Brown. Those are some strong words, but he has backing for them. Twitter’s IPO will not be lead by a major brokerage; both Twitter and the exchanges have learned from their Facebook mistakes and the hype will not be the same this time around.
Twitter is a big company, but it is no Facebook Inc (NASDAQ:FB). The hype around the IPO will not be accompanied by the film extravaganza that was The Social Network, nor will there be an iconic figure like Mark Zuckerberg in attendance. The Twitter IPO will not be a cultural phenomenon as the Facebook IPO was. Brown is absolutely right about the expected hype.
At the same time, the lack of a major brokerage at the head of the IPO could keep the shares out of the hands of retail investors who are more inclined to panic on the first day. Morgan Stanley is blamed for many of the problems with the Facebook Inc (NASDAQ:FB) IPO. Goldman Sachs, interestingly enough, has emerged as a trustworthy name in comparison.
Facebook’s effect on Twitter
There is hope that Twitter and the exchanges have learned from the mistakes of the Facebook Inc (NASDAQ:FB) IPO, but there is little certainty in that thesis. Twitter certainly filed a less exciting IPO document, which is a cause for hope, but there have been technical failures on exchanges in recent weeks.
Facebook Inc (NASDAQ:FB) undoubtedly has a huge effect on the Twitter IPO, but the similarities between the two have been overstated in order to make the narrative fit. Twitter is a company in its own right, and the media should treat it as such.