If Twitter executives are smart, they will have paid attention to what didn't work for their much larger counterpart and figure out how to not make the same mistakes, say analysts.
"I would certainly hope Twitter learned from the Facebook IPO debacle, but going public has its downsides," cautioned Patrick Moorhead, an analyst with Moor Insights & Strategy. "Public companies are slower and less nimble than private companies, which aren't, by law, required to report to the SEC and are not governed by short-term-investor mentality."
So what does Twitter need to do to avoid IPO pitfalls and come out of this successful?
First, says Moorhead, they need to carefully evaluate their opening share price. "Twitter needs to price their IPO in a way that shows a first day pop," he explained. "Part of Facebook's problem is that they got too greedy on their price, and they closed lower than they opened, blotting any perception of success."
Olds noted that after Facebook's IPO, there will be a spotlight on Twitter's initial public offering. That means the company really needs to stay on top of its underwriters and the exchange technicians to make sure that everything runs smoothly.
If the shares are priced right, there should be a high degree of demand for Twitter shares. That will bring even more scrutiny.
"The market is ready for Twitter," said Olds. "The question is if Twitter is ready for the scrutiny it's going to get. It will have to submit to the most thorough physical imaginable, which will be even more intense due to the Facebook debacle."
Olds added that Twitter will have to impress Wall Street with its business plan for user and revenue growth.
"They need to show investors their current business model and give direction on how they expect it to evolve over the next few years," said Olds. "Right now, Twitter is a one-trick pony. While they've become a household word and are used daily by hundreds of millions of people, many observers are scratching their heads about how this popularity is going to translate into big money and profits."
"One big factor in Twitter's favor is its deep penetration into the mobile market," he added. "However, the same questions about how they monetize that popularity remain."
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