Analysis: Twitter may kickstart consumer-tech IPO train

Fri Sep 13, 2013 7:36pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Sarah McBride and Olivia Oran

SAN FRANCISCO (Reuters) - Since Facebook Inc's messy initial public offering more than a year ago, the buzz in technology investment has mostly surrounded companies serving businesses rather than consumers - a situation Twitter's imminent debut could help reverse.

From accommodation service Airbnb and storage site Dropbox, to limo-providers Uber, a clutch of hot Silicon Valley names that have steered clear of the markets may now gravitate back if Twitter helps revive investor interest in consumer apps and dotcoms.

That would mark a shift from the status quo since Facebook made its debut to much fanfare in May 2012, only to swiftly fall below its $38 IPO price and stay there for over a year. As daily deal promoter Groupon Inc and online game maker Zynga Inc also wilted, enterprise companies like Workday Inc - a human resources software provider - became de facto market darlings.

Now Twitter is leading by example, choosing to go public for some of the same reasons that will encourage its peers: buoyant U.S. markets and financial backers sitting on potentially huge but unrealized paper gains.

Assuming a successful showing, sentiment "will become better balanced" between enterprise and consumer companies, says George Zachary, a partner at Charles River Ventures and an early investor in Twitter. Improving confidence about their finances and rising employment among consumers should help too.

"A strong rebound in the economy will allow people to put more margin into buying consumer Internet companies," Zachary said.

Already, some financial advisers, including Alan Haft of Kelly Haft Financial in Irvine, California, say they have received calls from clients interested in buying Twitter stock. Twitter announced its intentions to go public on Thursday.

Most of the clients on the phone had invested in the IPO of Facebook, a stock that is now at $44 after a months-long rally.   Continued...

 
An illustration picture shows the log-on icon for the Website Twitter on an Ipad in Bordeaux, Southwestern France, January 30, 2013. REUTERS/Regis Duvignau