Twitter Looks Expensive — For Those Even Following

It’s the eve of the largest U.S. technology initial public offering since Facebook. Don’t tell that to the finance world.

Twitter is set to raise close to $2 billion tomorrow, giving a wide swath of investors the chance to bet on the future of the microblogging site.

Yet as of late last week, almost half — 44 percent — of financial professionals hadn’t heard of the San Francisco-based company’s intent to go public, according to a survey conducted by SurveyMonkey. The poll, taken Oct. 30 to Nov. 1, queried 548 people in the industry who were located across the U.S. Among participants aged 18 to 29, those in Twitter’s main demographic, 55 percent were unaware of the company’s plans.

Not all bulls are buyers, according to the survey. While about two-thirds of respondents said that Twitter’s stock will rise in the first six months after the IPO, 80 percent said they don’t plan on buying the shares on IPO day, with only 1.1 percent calling themselves extremely likely buyers.

At the time of the survey, 78 percent said the stock would debut below $20. That was when the indicated price was $17 to $20, a range that Twitter increased yesterday to $23 to $25.

Twitter has more than 230 million users and generates revenue by showing relevant advertisements based on who people follow and what they tweet about. Those queried aren’t optimistic about Twitter’s ability to turn that revenue into profit. Twitter lost $64.6 million in the most recent quarter.

The survey yielded 529 answers to the question — “What is the biggest challenge Twitter faces in the year ahead?” Among the seven answer choices, lack of profitability was the most popular choice, garnering 36 percent of the vote. User growth was second at 17 percent followed by poor post-IPO stock performance at 16 percent.


What do you think about this article? Comment below!