McAlester News-Capital, McAlester, OK

National News

November 7, 2013

Twitter goes public, begins trading at $45.10 a share

(Continued)

McALESTER —

Since then, the social network that lets users send short messages in 140-character bursts has attracted world leaders, religious icons and celebrities, along with CEOs, businesses and a slew of marketers and self-promoters.

Tempering expectations was a big theme in the weeks leading up to Twitter's IPO, but that all but flew out the window with the stock's opening surge.

The company tried to avoid the trouble that plagued Facebook's high-profile offering. Facebook's public debut was marred by technical glitches on the Nasdaq Stock Exchange. As a result, the Securities and Exchange Commission fined Nasdaq $10 million, the largest ever levied against an exchange. Those problems likely led Twitter to the NYSE.

Twitter is also likely hoping for a first-day pop of its shares that eluded Facebook's stock. Facebook's shares closed just 23 cents above their $38 IPO price on their first trading day. They traded below $38 for more than a year.

Still, $18 billion is a lofty valuation for Twitter compared with its peers. At its IPO price, Twitter valued at roughly 28 times its projected 2013 revenue --$650 million based on its current growth rate. In comparison, Facebook trades at about 16 times its projected 2013 revenue, according to analyst forecasts from FactSet. Google Inc. meanwhile, is trading at about 7 times its net revenue, the figure Wall Street follows that excludes ad commissions.

Research firm Outsell Inc. puts Twitter's fundamental value at about half of the IPO price, says analyst Ken Doctor. That figure is based on factors such as revenue and revenue growth.

"That's not unusual," Doctor says. "Especially for tech companies. You are betting on a big future."

One of Twitter's biggest challenges as a newly public company will be to generate more revenue outside the U.S. More than three-quarters of Twitter's 232 million users are outside the U.S. But only 26 percent of Twitter's revenue comes from abroad. The company has said that it plans to bring in more international revenue by hiring more sales representatives in countries such as Australia, Brazil and Ireland.

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