The New York Stock Exchange on Saturday did a test run of Twitter’s highly anticipated market debut, as it seeks to avoid the types of problems that plagued Facebook’s initial public offering on rival NASDAQ.
The Big Board, run by NYSE Euronext, regularly does systems testing on the weekends, but this was the first time it had run a simulated IPO, and it did so at the request of its member firms — many of whom took part in Facebook’s IPO last year on NASDAQ OMX Group’s main exchange.
The NYSE was testing mainly for two things: To see if its systems could handle the amount of message traffic that might be generated by the IPO; and to make sure that once the IPO took place any firms that placed orders would promptly receive the reports telling them that their orders had been executed.
It can also be seen as part of NYSE’s struggle with NASDAQ for supremacy in technology listings. Both exchanges vied to be home to Twitter’s stock, and many analysts said the trading disruptions that occurred on Facebook’s NASDAQ debut likely played to NYSE’s favor, as it tries to become the destination of choice for technology listings, something NASDAQ once dominated.
BIGGEST IPO
Twitter, which intends to sell 70 million shares at between US$17 and US$20 each, will be holding the biggest Internet IPO since Facebook, which sold a much larger 421 million shares at US$38 each. Twitter is expected to start trading as early as Nov. 7.
In the case of Facebook, the tremendous volume of orders on the first day of trading exposed a glitch in NASDAQ’s system, ultimately preventing timely order confirmations for many traders, leaving them unsure about their exposure for hours, and in some cases for days afterwards. Major market makers estimated they lost collectively up to US$500 million in the IPO.
The absence of NASDAQ CEO Robert Greifeld while the meltdown was occurring magnified the criticism toward the exchange — he had been celebrating the debut at Facebook’s California headquarters before jumping on a plane back to New York.
NASDAQ was fined US$10 million by the US Securities and Exchange Commission — the largest fine ever for an exchange — and said it would voluntarily pay up to US$62 million to compensate firms that had been harmed. On Friday, NASDAQ said US$41.6 million of claims put forward qualified for the compensation plan.
FACEBOOK CHAOS
The chaotic debut also contributed to a decline in Facebook’s stock. The stock hit a low of US$17.55 in August, though it has since more than recovered the losses, closing on Friday at US$51.95, well above its IPO price.
While NASDAQ had tested its systems in the lead-up to the IPO, allowing member firms to place dummy orders to a test symbol over a specific period, it limited the total number of orders that could be received in the simulation to 40,000.
On the day of the IPO, more than 496,000 orders were placed before the IPO opened, with about 82 million shares traded. By the end of the day, more than 500 million shares had traded hands, a record for an IPO.
NO CHANCES
NYSE’s tests on Saturday ran hundreds of thousands of orders, with one single firm placing an order at one point for nearly 81 million shares.
“This morning’s systems test was successful, and we’re grateful to all the firms that chose to participate,” an NYSE spokesman said.
“We are being very methodical in our planning for Twitter’s IPO, and are working together with the industry to ensure a world-class experience for Twitter, retail investors and all market participants,” he added.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is