Twitter Price Target $50 at End of 2014: Peck
The contours were familiar: A hot social-media company going public with investors baying to buy its stock. Yet the outcome of Twitter Inc.’s initial public offering was far different from Facebook Inc.’s, underscoring the delicate balancing act of pricing IPOs.
Twitter rose 3.8 percent after surging 73 percent yesterday, the biggest day-one jump for an IPO of more than $1 billion since 2007, according to data compiled by Bloomberg. The company received orders for about 30 times as many shares as it offered at the $26 IPO price, according to a person with knowledge of the matter. Facebook was little changed in its debut and slumped 11 percent the next trading day.
The dichotomy highlights the difficulty of reconciling the two main goals of an IPO: raising as much money as possible for the company while also ensuring a significant pop for investors in the first day of trading. With Facebook’s first-day flop and subsequent yearlong slump still fresh in their minds, Twitter and its bankers opted for an IPO price that would be quickly surpassed, avoiding the investor backlash that Facebook is only now recovering from.