Money Morning Article of the Week
by Diane Alter
Thursday, micro-blogging site Twitter (NYSE: TWTR) debuted as a publicly traded company on Wall Street’s Big Board. Many analysts – including those at Money Morning – steered clear of the hotly anticipated IPO – but TWTR had no trouble generating investor interest.
The San Francisco-based company even increased its price range last Monday on roughly 70 million shares from $17 to $20 per share to $23 to $25. The move valued the company at a whopping $13.9 billion, or 26 times its revenue over the last 12 months. Twitter hoped to raise as much as $1.75 billion.
Wednesday the IPO was raised to $26 (valuing the company at $14 billion) and the stock cruised quickly above $49 once trading opened. After pulling back below $4o in early trading Monday the stock closed up $1.25 for the day at $42.90. The IPO raised $1.8 billion for Twitter and the market cap is currently $23.37 billion.
TWTR is still a mere sliver (10%) of Facebook Inc.’s (Nasdaq: FB) debut size, and more akin to LinkedIn’s (NYSE: LNKD) 7.8 million share ($406 million) offering. Twitter aimed to avoid a repeat of the Facebook IPO fiasco by selling a modestly sized and reasonably priced deal.
On May 18, 2012, Facebook sold 421.2 million shares at $38 apiece, amassing a hefty $16 billion in new capital. Facebook’s IPO became the largest tech offering ever (but far from the best).
It was also the third largest overall in U.S. history, behind only General Motors Co. (NYSE: GM), which raised $18.1 billion in its November 2010 market debut, and Visa Inc. (NYSE: V), which raised $19.65 billion in March 2008.
In honor of Twitter’s launch, we take a look back at the biggest tech IPOs and include the most lucrative deal to date. The list is an eclectic mix and timely reminder of the risks and rewards of IPO investing.
Top Ten Tech IPOs
The roster comes via data from public-offering research firm Renaissance Capital. Since Twitter raised $1.8 billion, it will move to No. 2 on the following list:
10. Orbitz Worldwide Inc. (NYSE: OWW). Seemingly doomed from the start, the travel site went public on July 19, 2007. Thirty-four million shares were priced at $15 a share, below the $16 to $18 investors were expecting. The Chicago-based company raised $510 million. Shares dipped as low as $14.50 during its first day of trading and are now more than half off at $7.34.
9. Groupon Inc. (Nasdaq: GRPN). The daily deals site debuted Nov. 4, 2011, selling 35 million shares at $20 each, above the expected $16 to $18 to accommodate frenzied demand. The Chicago-based company became the largest Internet company since Google Inc.’s (Nasdaq: GOOG) launch in 2004. Shares hit $31.14 its first day of trading, but fell to $2.60 over the next several months. The stock now trades at less than half its offering price.
8. Renren Inc. (Nasdaq: RENN). Launched May 4, 2011, this Chinese social networking stock was one of the most anxiously awaited IPOs of the year and was deemed a predecessor for Facebook’s debut set for a year later. Renren sold 53.1 million shares at $14 each, raising $743 million. The stock soared 40% its first day of trading, later fell to $2.52, and now languishes at $3.33.
7. Giant Interactive Group Inc. (NYSE: GA) listed on the NYSE Oct. 31, 2007. A leading Chinese online game developer, the company sold 57.2 million American Depository Shares (ADRs) at $15.50, above the forecast range of $12 to $14. Shares traded as high as $20.46 on its debut only to tumble to $5 a share in the following months. The stock now changes hands around $8.51.
6. Zynga Inc. (Nasdaq: ZNGA) opened at $11 a share when it went public on Dec. 16, 2011. Shares added another half-dollar during the day before ending the session at $9.50. The social gaming company raised $1 billion, selling 100 million shares in its IPO. Shares currently trade $3.69, up from a low of $2.09.
5. Shanda Games Ltd. (Nasdaq: GAME). The biggest IPO of the year, shares of this Chinese online gaming company debuted Sept. 25, 2009. The company sold more than 13 million ADRs at the top of its $10.50 to $12.50 range, raising $1.04 billion. By the closing bell, the stock was down $1.75 at $10.75. Shares slumped as low as $2.68. Last trade was $4.09.
4. Infonet Services. A victim of the dot-com bubble and bust, this El Segunda, Calif.-based data communications company sold 51.2 million shares at $21 each on Dec. 16, 1999. Shares no longer trade.
3. Yandex N.V. (Nasdaq: YNDX). The Russian search engine listed on the Nasdaq on May 25, 2011, in what the was biggest tech IPO of 2011. Shares surged 55%, or $13.84, on its first day of trading to finish the session at $38.84. The Moscow-based company sold 52.2 million shares at $25 apiece, ahead of the proposed $20 to $22 range, raising $1.3 billion. The stock has traded up to $42 and presently rests around $38.
2. Google Inc. (Nasdaq: GOOG). Shares of the Internet search behemoth are up an astounding 1,000% since its IPO launch on Aug. 19, 2004, at $85 a share, raising $1.6 billion. The stock recently joined the exclusive “One Thousand Club.” Shares peaked at $1,027 a few weeks ago and currently sit at some $1,017 a share. The outlook for the Mountain View, Calif.-based company remains bullish. A $1,000 investment at the IPO would now be worth some $12,000, according to Mashable. In many ways, Google gets the crown for the best tech IPO to date.
1. Facebook (Nasdaq: FB) was the biggest tech IPO ever. But it was peppered with a plethora of problems from the get go. Plagued with technical glitches, the social networking leader raised $16 billion in a 421-million-share offering at $38 each on May, 18, 2012. Shares slipped during the day and continued to slide, ending its first week at $26.81. The stock spiraled downward for months, hitting a low of $17.52 in September 2012. Shares eventually rebounded, surging nearly 90% this year, thanks to improved monetization of its mobile base. However, with Twitter set to become a public company, many investors are booking FB gains and hoping to get in on the Twitter action.
Google isn’t the only stock to hit the $1,000 mark, and it won’t be the last. Just think of the gains you can pocket if you get in now on one of the next stocks to hit this share-price milestone. We have a list of the best contenders…
- MSN Money:
Largest IPOs in US History
- Renaissance Capital:
Largest Internet IPOs
Can You Get Rich by Investing $1,000 During an Internet IPO?
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