After months of speculation the prices have been set for the opening selection of Twitter shares. These have been announced as falling between $17 and $20 each.
Many experts have seen this as a smart and cautious move by the social networking site. They have seen the disaster that Facebook went through at its initial public offering, and they obviously want to avoid the same thing happening to them. We covered the cautionary tale aspect of this story a couple weeks back. Last week we also wrote about the potential short and long term aspects the shares in Twitter could present us with. Click back through those links now to read more about the frenzy that is building up over the shares, and where it could take us in the future.
What’s the initial value?
With the shares priced as indicated above, Twitter has a market value of around $11.1 billion dollars. However people who gamble on the price the shares could eventually reach have put a much higher price on it as a result. This is speculation of course but figures have gone as high as $30 billion dollars – and this is from the start.
This means shareholders could see their shares rise sharply in value on the first day of trading. If this were to happen it would stand in sharp contrast to what happened with the Facebook share debacle. This stands as an example of what NOT to do at a social media site IPO. Hopefully Twitter will perform far better and prove to be an example of perfect practice. We can but wait and see.
What will happen when the IPO finally takes place?
Rather than seeing the value of the shares drop like a stone, as they did with Facebook’s IPO, Twitter shares should start rising almost immediately. It will be interesting to see whether the projected value does turn out to be accurate.
However, the fact that those in charge of the IPO are playing things very cautiously bodes well for the eventual outcome. No one knows what the picture will look like several months down the line, but few expect the launch to be anything like the Facebook example.
Of course Facebook was not the only site that suffered. Groupon Inc also lost a significant amount of their estimated value due to overpriced shares, as did Zynga Inc. These cautionary tales have obviously been seen and noted by Twitter, and those in the driving seat do not want to go down the same path.
No one knows exactly what will happen until the IPO takes off, but all the signs are pointing towards a successful launch. Anyone with shares could expect to earn a significant amount from them, especially if the projected figures provided by the gamblers mentioned earlier are anywhere near accurate.
We’ll all be watching to see how high the share price could go – and how quickly it happens as well. Could this be the biggest social media success in history?