How Twitter’s IPO Stacks Up Against Other Tech IPOs
- Xavier Villarmarzo
- On November 8, 2013
After Twitter’s first day of public trading on Wall Street, we all know by now how well it did – gaining 72.69 percent on its $26 initial public offering to close the day at $44.90. Not only did day one of trading thrust the company’s founders into the billionaire club, it also grew the company’s market value by $13 billion over the night before.
Twitter’s day one success has already been compared favorably to that of its top competitor Facebook, which gained less than one percent after its first day of trading on May 18, 2012. Aside from the dichotomy of the stock performance, Twitter also didn’t need its bankers to buy shares to keep the price above IPO on day one. Also unlike with Facebook’s IPO, Twitter’s insiders held off on selling the shares, keeping the money raised from the IPO for business. More than half the money Facebook raised went into the company’s early shareholders.
Compared to all of the well-known tech companies that have gone public since 2011, Twitter’s day one growth has seen the most success. For instance, online radio station Pandora gained only 9 percent on day one on June 15, 2011, going from $16 per share to $17.42. Groupon went public on Nov. 14, 2011, at $20, and gained 31 percent to close at $26.11. FarmVille-creator Zynga dropped 5 percent after its day one on Dec. 16, 2011, from $10 to $9.50.
Twitter’s IPO performance can probably best be compared to those of Yelp and LinkedIn. While neither company raised anywhere near a billion dollars on its IPO, their stock prices soared on day one. Yelp’s opening on March 2, 2012, saw the stock price grow 63 percent, from $15 to $24.50. LinkedIn actually performed better than Twitter, more than doubling from its $45 open to $94.25 at the closing bell in May 2011.
Historically, Twitter’s first day percentage growth was even better than those of Google, Yahoo, Amazon, Apple and Microsoft. However, even with its impressive debut, Twitter still has a long way to go to hang with those companies – even Facebook. While it may have done better than Facebook on its first trading day, it still has just one-fifth of Facebook’s active user base and lost over $133 million in the first nine months of 2013, compared to the $1 billion Facebook earned in profits before its IPO.
The IPO honeymoon is now over and the bar has been set very high for the company. The next few months will be crucial, as Twitter is set to roll in new features designed to bring in more revenue.
Image Source: DigitalTrends.com
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