Twitter made a spectacular Wall Street debut yesterday, but analysts warned of challenges ahead for the popular messaging service vying to become the next fixture for global Internet users.
The company’s shares shot up by more than 90 percent in early trade to a peak of just more than US$50. In the end, the stock closed with a one-day gain of 73 percent at US$44.90, from the initial public offering (IPO) price of US$26.
However, analysts cautioned that the success of the IPO was just a first step for Twitter, which must now justify its hefty valuation.
Photo: Reuters
“Kudos to Twitter for orchestrating a highly successful IPO,” Lou Kerner of the Social Internet Fund said. “However, as Facebook showed, an IPO success, or disaster in Facebook’s case, is really just noise in the long term. Twitter’s success as a stock is going to be based on how the company performs.”
Kerner said Twitter “needs to perform extraordinarily well, in terms of user growth, user engagement and user monetization to justify its price.”
Appropriately, #TwitterIPO was among the top trending topics on the social network for much of the day.
Twitter chief executive Dick Costolo attended the opening on the New York Stock Exchange and said the company has a lot of work ahead.
Asked about Twitter’s growth potential, Costolo said “it’s all about making it very simple and easy for new users to come to the platform ... we all have examples of why this service can be useful to everyone on the planet.”
Cantor Fitzgerald analyst Youssef Squali was upbeat about the company, saying in a note to clients that: “Twitter is based on a one-to-all, all-the-time broadcast distribution model and as such, fulfills an unmet need.”
“This model is highly complementary to traditional media outlets [especially TV] and fulfills the need for up-to-the-minute, trending information in real time,” it said.
However, Brian Wieser at Pivotal Research issued a “sell” recommendation after the opening, saying Twitter “is simply too expensive” after the hefty opening gains with “nearly the same valuation as CBS [Broadcasting Inc] ... or even Yahoo [Inc].”
Larry Chiagouris, a professor of marketing at Pace University, said the “investor mania” around Twitter is not an indication of success.
“The fundamental question is how much people have to say on Twitter,” he said. “We know there are some people who are social and want to talk all the time, but you can’t make a business model on those people.”
Chiagouris added that: “Large corporations with hundreds of millions of dollars have not put substantial sums into paid media with Facebook and Twitter.”
“They all are experimenting, but nobody is putting 25 percent in social media. It may not sound cool, but traditional media is still the media of choice today,” he said.
Twitter offered 70 million shares trading under the symbol TWTR, generating US$1.82 billion, and gave underwriters a 30-day option to purchase an additional 10.5 million shares.
The IPO assigned a market value of about US$14.4 billion to the company whose messaging service has become a hugely popular tool for celebrities, journalists, political leaders and others. However, by the end of the day, that value had topped US$24 billion.
With the over-allotment, it should be the second-biggest tech IPO after Facebook’s US$16 billion effort last year and ahead of Google Inc’s 2004 offer, which raised US$1.92 billion, according to research firm Dealogic PLC.
Depending on the outcome of the common stock offer to underwriters, between 12.8 and 14.5 percent of the company’s shares will be publicly traded. The rest are held by its founders and a handful of early investors.
Twitter has fast become engrained in popular culture, but must still convince investors of its business model, having lost more than US$440 million since 2010.
The research firm eMarketer estimates Twitter will bring in US$582.8 million in global ad revenue this year and nearly US$1 billion next year.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day