Maintain NASDAQ 4,000 this week?
-- Jack Krupansky
Financial and Economic Perspectives for the Individual Investor
Twitter's management and its bankers are happy with the IPO's outcome, according to a person with direct knowledge of their thinking. While they're not surprised the stock gained so much, because of the overhang in demand, they expect it to drop toward $30 a share during the next three weeks, this person said.
Twitter, Inc. (symbol TWTR) has priced at $26 per share and is expected to begin trading in the secondary market on Thursday, November 7, 2013. Limit orders will be accepted at approximately 7:00 AM ET on Thursday, November 7, 2013, and Market orders will be accepted when Twitter (TWTR) begins trading on the New York Stock Exchange.
(QX0055) The symbol you entered is not recognized. If you are attempting to place an order for Twitter, please note that its announced common stock offering is currently not expected to start trading in the secondary market until after market open on November 7, 2013. Limit orders may be accepted after 7:00 am ET on November 7, 2013 but market orders are not eligible until the security starts to trade in the secondary market.
November 6, at 4 PM ET - We begin accepting limit orders for Twitter.November 7, on or after the market open – Once trading begins on the secondary market, we will accept all order types.
Twitter's Inc.'s initial public offering is likely to price at $25 to $28 a share, according to fund managers briefed by Goldman Sachs Group Inc. and Morgan Stanley bankers, two of the banks underwriting the deal.
Thanks to the strong demand for its stock, Twitter is planning to close the order books for its I.P.O. on Tuesday at noon, a day earlier than scheduled, according to people familiar with the matter.
Twitter still plans to price on Wednesday and begin trading on Thursday.
What Twitter's IPO means
You are not eligible to participate in equity new issue offerings through Fidelity Investments. Eligibility is reserved for brokerage customers with a minimum of $500,000. Auction OpenIPOs and Secondary offerings made available through Fidelity are reserved for brokerage customers with a minimum of $100,000 in certain assets held at Fidelity. Members of Premium Services or customers who have placed 36 or more stock, fixed income, or option trades in a rolling 12-month period are eligible for either traditional or auction based offerings.
My completely uninformed guess is that the bankers think that Twitter's fair price is closer to $25/share and that they have set the range at roughly 20% below those estimates. If the offering goes as choreographed, here is how it should unfold.
- The road show will be well received and the bankers will announce (reluctantly) that the high enthusiasm shown by investors has pushed them to set the offering price at $20/share.
- Institutional investors will start lining up for their preferred allotments at that offering price and the enthusiasm bubble will grow.
- On the offering date, the stock will jump about 20%-25%, leading to headlines the next day about the riches endowed on those who were lucky or privileged enough to get the shares in the offering.
- Some of the rest of us, who were not lucky or privileged enough to be part of the offering, will be drawn by these news stories into the stock, pushing the price higher, and keeping the momentum game going.
- In a few months or perhaps a year, some of the owners of Twitter (big investors and venture capitalists) will be able to sell their shares and cash out.So, what can go wrong with this script? The biggest actor in this play is Mr. Market, a notoriously moody, unpredictable and perhaps bipolar (though that may require a clinical judgment) character. As was the case in Facebook, a last minute tantrum by Mr. Market can lay waste the best laid plans of banks and analysts.
If the momentum game turns against the stock and the price drops to $10/share, I will be ready to by [sic].
Twitter, Inc. is offering 70,000,000 shares of common stock to be listed on the New York Stock Exchange under the symbol "TWTR". Pricing is expected on Wednesday, November 6, 2013 (post-close). The expected pricing will be $17.00 - $20.00 per share.
Twitter will start meeting investors on its road show on Oct. 28, according to a schedule obtained by Bloomberg. The company will make stops in cities including New York, Boston,Chicago, San Francisco, Los Angeles and Denver before ending up back in New York on Nov. 6, the same day the final pricing of the shares is scheduled. Twitter would then start trading on the New York Stock Exchange the next day.
If you're tempted to invest in the initial offering, do it for the right reasons – that you're in for the long term because you admire what the company does and that you have no illusions of making a quick buck.