What Companies Can Learn from the Twitter IPO
After the vexing issues with Facebook’s IPO over a year ago, many companies were watching what would happen with Twitter’s IPO. From a business standpoint, Twitter appears to have navigated the IPO waters smoothly. Let’s look at what they did differently.
Twitter chose the NYSE instead of NASDAQ. This was an interesting choice; not only because many notable tech companies trade on the NASDAQ (Microsoft, Google, Apple, and Facebook) and Twitter may have been expected to follow suit, but because the NYSE employs a unique process of 'price discovery' before the actual trading begins. For more than an hour after the other NYSE stocks began trading last Thursday, tentative Twitter orders were shouted from the exchange floor until a final opening price was determined. This "old fashioned” approach is in contrast to the NASDAQ, which is a purely electronic exchange. NASDAQ has been plagued with technical difficulties this year; at least in this instance, the NYSE’s “human element” may have made a difference.
Another difference was Twitter announced their IPO less than two months ahead of their actual offering. This was a noticeable short time frame for an IPO announcement. How were they able to do that? In 2012, Congress passed the Jumpstart Our Business Startups Act which allows companies who meet certain criteria to confidentially file their IPO paperwork, and publicly reveal those documents only within a month of the IPO.
Twitter’s choice of the NYSE and a shorter timeframe for announcing the IPO may have contributed to achieving the effective end result. Twitter successfully raised billions of dollars and the IPO went smoothly. Now the work begins for Twitter to turn a profit and show a return to investors.