Memories of Facebook cloud Twitter's IPO

Sun Oct 6, 2013 7:40pm EDT
 
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By Poornima Gupta

SAN FRANCISCO (Reuters) - When Facebook Inc was preparing to go public last year, the telephones at Granite Investment Advisors rang off the hook as clients called about the social media's company's highly anticipated debut.

In stark contrast, the investment company has not fielded any calls about Twitter as of Friday morning.

"Not a single call yet," said Tim Lesko, the principal at Granite Investment Advisors, who added that he himself will hold back until he sees a few more quarters of financial results.

"We want to start seeing numbers," he said. "They need to mature a little bit before we would think that we were getting good numbers and consistent numbers."

As Twitter Inc races toward the year's most highly anticipated tech offering, memories of Facebook Inc's disappointing 2012 debut are dampening enthusiasm for shares of the eight-year-old online messaging service.

Like Facebook, Twitter enjoys strong brand recognition, which typically translates to outsized retail investor interest. That was one of the reasons Facebook was able to raise its IPO price to $38 a share, giving the company a valuation of $100 billion, or about 99 times its 2011 earnings.

Facebook shares plummeted on their first day of trading and continued to decline in the following months. They did not regain its IPO valuation until more than a year later, in August this year.

Twitter, which is expected to go public some time before Thanksgiving, has yet to determine pricing, but investors say it might come under pressure from its financial backers to go high. Analysts expect the company, which posted a $69 million loss last year, to seek a valuation of at least $10 billion.   Continued...

 
The shadows of people holding mobile phones are cast onto a backdrop projected with the Twitter logo in this illustration picture taken in Warsaw September 27, 2013. REUTERS/Kacper Pempel