TWTR • Hacker News Board

Re: TWTR

#81

Post by mikeash » Thu, Nov 07, 2013, 5:33 PM UTC

vdaniuk wrote: post #55

mikeash wrote: post #14

Earlier quoted context omitted.

Yes, there are. If you were able to do that, that means that VMWare and Visa both got screwed out of billions of dollars. And of course, little guys can't get in right at the IPO price. That's reserved for big players. By systematically underpricing IPOs, the finance folks make billions of dollars for their friends at the expense of the companies they're supposed to represent.

Please provide extraordinary proof for the extraordinary claim that tech IPOs are rigged to transfer shareholder value to the banks managing or participating in the OP.

Virtually every IPO is priced such that the market price is substantially higher than the offer price. This unquestionably transfers money from the market to those who are allowed to buy at the IPO price. That they are designed to do that seems like a reasonable conclusion from the fact that it happens over and over again.

Furthermore, when an IPO is priced such that this does not happen, such as with Facebook, it's criticized and called out as a disaster even though they sold all the stock they wanted to issue and made much more money for their company than they would have otherwise.

Re: TWTR

#82

Post by corford » Thu, Nov 07, 2013, 5:34 PM UTC

Can someone with more clue please tell me that the following cynical thought I keep having is wrong and laughably misinformed (and then explain why)?

Twitter's investors (who have plowed hundreds of millions in to a loss making company) decide to sell some of their stock at $26/share (after consulting with banks to arrive at this price). This will make right the losses they've experienced so far and pass the problem down the line. The banks buy at $26 and then immidiately flip for north of $40. This lines their pockets and passes the problem down the line once more to joe public.

End result: investors in loss making company cover their investment and make some profit, banks make some juicy profit for facilitating the game, joe public swallows the hype and makes the whole dance possible by eventually footing the bill.

Edit 1: thanks everyone for the thoughtful replies. I guess I can only continue to feel cynical if I believe that the original investors did all of this knowing full well that twitter never has a chance of living up to its valuation i.e. they just wanted to cover their losses, make a nice profit on top and punt the problem down river. The alternative is that the investors do honestly believe in the future profitability of the company and have decided now is the time to take some well earned profit as a reward for taking the financial risks in getting the company to where it is today.

It's going to take me some time to make my mind up as to which of those two scenarios I believe.

Edit 2: still difficult to understand why the banks have managed to come away with doubling their money though.

Edit 3 (final one!): See https://news.ycombinator.com/item?id=6691157 for a nice reply that seems (to my clearly very untrained eye) to make the investors motives a little less cynical.

Re: TWTR

#83

Post by AsymetricCom » Thu, Nov 07, 2013, 5:34 PM UTC

minimax wrote: post #76

joezydeco wrote: post #28

Earlier quoted context omitted.

But the bankers come up with those magical "buy/hold/sell" recommendations that everyone else listens to and panic-sells when their advice says so. Or "oops, they missed our magically predicted revenue by one penny per share". It's all part of the game.

Sell side analyst recommendations are a complete joke. They are basically trailing indicators (i.e. price drops and then the sell recommendations come out). I don't think anyone takes them seriously.

I saw an interesting article about GOOG recently that had explicit instructions about where to buy/sell and how long to hold. I laughed.

Re: TWTR

#84

Post by [deleted] » Thu, Nov 07, 2013, 5:34 PM UTC

twistedpair wrote: post #26

helper wrote: post #16

Earlier quoted context omitted.

The opening price was $26.

Opening price was $45.01 according to Google Finance, $45.10 according to the WSJ, and $45.10 according to Yahoo finance. Not $26. Insider pre-order price was $26.

[deleted]

Re: TWTR

#85

Post by alexeisadeski3 » Thu, Nov 07, 2013, 5:34 PM UTC

generj wrote: post #40

Tyrannosaurs wrote: post #20

Earlier quoted context omitted.

> Markets are highly irrational. That depends which recent Nobel Memorial Prize winner you believe.

In this world of quant-bots, I don't know how anyone can argue that we have a fully rational market. My understanding is that much of the progress in economics has been merging economics with psychology to identify rational failures.

Quant bots make the market better by increasing liquidity.

Re: TWTR

#86

Post by spullara » Thu, Nov 07, 2013, 5:35 PM UTC

goshx wrote: post #23

stevewilhelm wrote: post #13

Yahoo! Finance is more up to date. http://finance.yahoo.com/q?s=twtr&ql=1

Came here to point that out. I wonder why google's is so far behind.

Google doesn't care about Google Finance or most of the other copycat sites they made in the early 2000s. I'm more surprised that Google Finance hasn't been shut down.

Re: TWTR

#87

Post by mikeash » Thu, Nov 07, 2013, 5:35 PM UTC

apaprocki wrote: post #62

arjunnarayan wrote: post #3

If it stays at $46, that's a gigantic fuck up. They left a billion dollars on the table, and that's borderline breach of fiduciary duty. Of course, we have to wait and see what it settles at, and it's a little premature to heap scorn just yet. But the initial reaction is it looks like they overreacted to the Facebook IPO debacle (in my book, Facebook did the best thing possible for the company and extracted as much v…

From the Bloomberg story, which sums it up: “The company did everything to secure the most cash for itself while leaving some money for the IPO buyers,” said Josef Schuster, the founder of IPOX Schuster LLC, a Chicago-based manager of about $1.9 billion. “You need a pop at the opening to leave a good taste with everyone. They did a pretty good job managing the whole situation.” http://www.bloomberg.com/news/2013-11-0…

I was pretty sure that the financial companies demanded massive bribes in exchange for orchestrating an IPO, but it's still amazing to see it admitted in such a blatant fashion.

Re: TWTR

#88

Post by twistedpair » Thu, Nov 07, 2013, 5:36 PM UTC

the_watcher wrote: post #36

I'm not an expert in the stock market, and the only stock I own is Facebook (which I bought a long time ago), but I am confused as to why Facebook is dropping today while there is so much enthusiasm for Twitter. Buying Twitter is basically betting on mobile advertising, which Facebook is the clear leader of. Is it possibly related to people with Facebook stock selling some to get in on Twitter? Are they entirely unre…

A typical P/E ratio is around 13. Take Apple, smack on 13. If it is too high, you're spending too much. No official numbers for Twitter's profits, all guesses, but a suggested $116M profit this year gives a current P/E of 207. That means it would take 207 years, ignoring inflation (which would make it much worse) for the company to actually pay its investors/owners back the price of the company.

This is why people are suggesting going short. It is clearly over valued. The $26 initial valuation was more reasonable, if you assume the market information is wrong, and that Twitter will generate a far higher profit in the future. Your valuation is a bet on the market being wrong and Twitter's mobile potential being stellar.

Re: TWTR

#89

Post by polymatter » Thu, Nov 07, 2013, 5:37 PM UTC

pearjuice wrote: post #54

If you buy TWTR stock, what are you investing in exactly?

the person you sell TWTR to later, buys it off you at a higher price. I don't think you're buying TWTR for the dividend, you're looking for the capital gain.

Re: TWTR

#90

Post by johnymontana » Thu, Nov 07, 2013, 5:38 PM UTC

cft wrote: post #38

Can someone advise what's the best way to buy derivatives (etrade,scottstrade, etc): the fastest way to open an account, the best order execution times? I want to invest some money to short this.

You can always short the stock, but that is quite risky as your maximum downside is theoretically infinite (the stock can always go up). A bearish options strategy[1] can at least define your risk. Thinkorswim[2] options platform is my favorite, they were acquired by TD Ameritrade a while ago, but the thinkorswim platform is still independent from the larger TD Ameritrade system.

[1] http://en.wikipedia.org/wiki/Options_strategies [2] www.thinkorswim.com