Nasdaq and NYSE in $11bn Twitter flotation battle

Twitter announced its planned IPO by tweet yesterday, despite chief executive Dick Costolo's past denials. Pictures: Reuters
Twitter announced its planned IPO by tweet yesterday, despite chief executive Dick Costolo's past denials. Pictures: Reuters
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TWITTER’S long awaited confirmation that it will float sparked fevered speculation yesterday over where it will list as it looks to distance itself from the problems that beset rival Facebook’s debut.

The Initial Public Offering will see the social media company command a valuation estimated at $11bn (£6.9bn).

But while Nasdaq has for many years been the favoured choice for Silicon Valley company listings, the high-profile problems surrounding Facebook’s IPO has led to some commentators suggesting Twitter may break with tradition.

Analysts at PrivCo predict that Twitter will try and avoid Facebook’s problems by pricing the company at a “more modest revenue multiple” but also by floating its shares on the New York Stock Exchange (NYSE).

Nasdaq paid a $10 million penalty over the problems around trading and systems but Facebook also faced criticisms over its heady valuation.

David Pakman, a partner at US venture capital firm Venrock, also told Bloomberg: “Twitter will do everything they can to avoid anything that looks like the Facebook IPO… it will hopefully be able to keep expectations down a bit, and use a different pricing strategy than Facebook.”

Stuart Miles, founder of the tech website Pocket-Lint, said although the IPO was “the next logical step” for the company he said it was unsure as yet how successful a float would be.

“Like Facebook, it will all be about whether you fancy buying into the social network, rather than because you can see a quick return.”

Twitter’s chief executive Dick Costolo has for years played down suggestions Twitter intended to go public but Max Wolff of Greencrest Capital said the company was now a mouthwatering prospect for investors.

“It’s completely conquered mobile. It has an enormous social network. It’s becoming a key utility as a second screen to TV and it’s literally the first draft of history,” Wolff said.

Jed Hallam, head of social strategy at media agency Mindshare UK, said the news came as little surprise as over the last 12 months there had been a “marked increase” in Twitter’s focus on its paid advertising services.

Ishaq Siddiqi, market strategist at the financial spread betting firm ETX Capital, warned the market could be a “little more wary” with Twitter after the troubles that followed Facebook’s stock market debut but said the valuation was expected to be far more attractive.

Twitter, which is predicted to break even this year with revenues estimated at $500m, is expected to be priced at 20-30 times revenue, compared to over 40 times for Facebook.

Major Wall Street names have begun jostling for a slice of its impending debut with JPMorgan, Credit Suisse and Morgan Stanley all vying for roles in the IPO.

Several are thought to already be in informal conversations with the microblogging network’s management.

Twitter set out its plans last night telling users it had submitted a form to the American market regulator, the US Securities and Exchange Commission (SEC), ahead of a planned IPO.

It made use of a new rule that enables firms with revenues of less than $1bn to file the documents confidentially which means details of its finances will be kept under wraps until it begins to try and market the offering to investors.