#Ring – Twitter IPO opens at US$45.10 a share – 80pc higher than initial price

7 Nov 20138 Shares

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Pictured before the bell rang: Patrick Stewart, the actor known for portraying Captain Jean-Luc Picard, 9 near-old Vivianne Harr who ran a lemonade stand for 365 days to protest slavery and a representative of the Boston Police

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Twitter has just begun its life as a public company with an initial trading price on the New York Stock Exchange of US$45.10 a share – this is up 80pc on the US$26 asking price set by Twitter earlier today that valued the company at US$18.1bn.

Trading just began on the New York Stock Exchange in the past few minutes and it appears Twitter has so far evaded the technical glitches that affected the Facebook IPO last year on its first day’s trading, preventing the social network rising beyond its IPO price. In fact it took Facebook a year to go beyond its IPO price.

The IPO by Twitter has been met with by brisk trading activity that saw the share price reach US$47 at the time of writing.

The opening bell was rung by Patrick Stewart, the actor known for portraying Captain Jean-Luc Picard, 9 near-old Vivianne Harr who ran a lemonade stand for 365 days to protest slavery and a representative of the Boston Police.

In its prospectus released a month ago, Twitter reported revenue of US$253.6m but had a loss of US$69.3m.

The largest Twitter shareholder specified in the prospectus is co-founder Evan Williams, who owns 12pc of the shares. Other major shareholders include Benchmark Capital, which owns 6.7pc of the company; Twitter co-founder and chairman Jack Dorsey, who owns 4.9pc; and Twitter CEO Dick Costolo, who owns 1.6pc of the company.

Is Twitter worth the high valuation?

“Twitter’s valuation may seem high, but we have to be conscious that the global marketing industry is worth hundreds of billions of dollars– a pot of money that we expect programmatic advertising platforms to be taking an increasingly large portion of in the future,” said Rupert Staines, MD UK & Europe, RadiumOne.

“In the first half of this year in the UK alone, for instance, the IAB has reported that Digital AdSpend was worth stg£3.041bn.

“We’re seeing a distinct shift towards digital marketing, in general, and any discussion of Twitter’s valuation has to be viewed in the context of the market as a whole.

“The opportunity for Twitter to capitalise on the mass of consumer data it has is massive. The company will have to tread a fine line between pleasing its advertising partners and its user-base, but as it refines its targeting mechanisms you should expect to see more relevant adverts appearing in users’ streams.

“One worry for the company and potential investors has to be the risk of overcooking the dish, as seen with Facebook initially. Twitter has a huge potential in the online advertising market and is a company to reckon with, but let’s not forget that the online advertising market is bigger than just one company and over-inflated expectations could skew the perceived value of its shares,” Staines said.

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com