Thursday 25 December 2014

Twitter IPO: Bumper launch makes social network worth $31bn

Published 07/11/2013 | 16:32

Actor Patrick Stewart (R) and 9-year-old Vivenne Harr (C), who uses proceeds from her lemonade stand to fight slavery, ring the opening bell as Twitter co-founder Evan Williams and and Boston police officer Cheryl Fiandaca (L) look on during the Twitter IPO on the floor of the New York Stock Exchange
Actor Patrick Stewart (R) and 9-year-old Vivenne Harr (C), who uses proceeds from her lemonade stand to fight slavery, ring the opening bell as Twitter co-founder Evan Williams and and Boston police officer Cheryl Fiandaca (L) look on during the Twitter IPO on the floor of the New York Stock Exchange
Twitter executives Dick Costolo (R), Evan Williams (2nd R), Biz Stone (C) and Jack Dorsey (2nd L) celebrate as Twitter IPO begins on the floor of the New York Stock Exchange in New York
Twitter CEO Dick Costolo is inteviewed before the Twitter Inc. IPO on the floor of the NYSE in New York

Shares in Twitter have gone on sale to the public for the first time, instantly leaping more than 70pc above their offering price and closing at a value of $31bn.

By the closing bell, the social network that reinvented global communication in 140-character bursts was valued nearly as much as Yahoo, an internet icon from another era, and just below Kraft Foods, the grocery conglomerate founded more than a century ago.

Twitter, which has never turned a profit in the seven years since it was founded, worked hard to temper expectations ahead of the IPO, but all that was swiftly forgotten with the stock's opening surge.

The most anticipated initial public offering of the year was carefully orchestrated to avoid the glitches and eventual letdown that surrounded Facebook's first appearance on the Nasdaq 18 months ago.

Trading on the New York Stock Exchange under the symbol "TWTR," shares opened at $45.10, 73% above their initial offering price.

In the first few hours, the stock jumped as high as $50.09. Most of those gains held throughout the day, with Twitter closing at $44.90, despite a broader market decline.

The narrow price range indicated that people felt it was "pretty fairly priced," said JJ Kinahan, chief strategist at TD Ameritrade.

The immediate price spike "clearly shows that demand exceeds the supply of shares", said Wedbush analyst Michael Pachter.

Earlier in the day, Twitter gave a few users rather than executives the opportunity to ring the NYSE's opening bell. The users included actor Patrick Stewart, who played Captain Jean-Luc Picard in Star Trek: The Next Generation; Vivienne Harr, a nine-year-old girl who ran a lemonade stand for a year to raise money to end child slavery; and Cheryl Fiandaca of the Boston Police Department.

Named after the sound of a chirping bird, Twitter's origins date back to 2005, when creators Noah Glass and Evan Williams were trying to get people to sign up for Odeo, a podcasting service they created. Odeo did not make it.

By early 2006, Mr Glass and fellow Odeo programmer Jack Dorsey began work on a new project: teaming with co-worker Christopher "Biz" Stone on a way to corral text messages typically sent over a phone.

It was Mr Glass who came up with the original name Twttr. The two vowels were added later. The first tweets were sent on March 21 2006.

By 2007, Twitter was incorporated with Mr Dorsey as the original CEO and Mr Williams as chairman. The pair would eventually swap roles. Both remain major shareholders, though neither runs the company.

Since those early days, the site has attracted world leaders, religious icons and celebrities, along with CEOs, businesses and countless marketers and self-promoters.

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