To Tweet Or Not To Tweet: Who’s Buying At Twitter’s IPO
Twitter Inc. (NYSE:TWTR) is set to begin trading tomorrow, and everyone has an opinion on what they think the stock will do when the market is flooded with the IPO. The initial estimates were that Twitter would be priced between $17 and $20 per share, but those numbers have been proven incorrect.
The underwriters of the IPO have set the price at $27 per share, provided the market continues to swing up.
Hedge Funds Offer Opinions
Boardman Bay Capital Management will most likely be purchasing the stock tomorrow, as Will Graves, the CIO, has noted. He said, “Boardman Bay is interested in the TWTR offering, like most of Wall Street. An indication of the demand is that we have been approached by global macro funds and others that seek an understanding of TWTR and the opportunity—this is not the core-strategy of these funds, and thus it’s obvious that many are playing this offering, maybe some just for sport.”
Another hedge fund manager, who requested that CNBC not reveal his identity, said that he feels Twitter Inc. (NYSE:TWTR) is a “Buy”. He said, “Our basic take is that this is a buy at the IPO, and most institutional investors agree.” He went on to say that the stock could swing up to $36 per share following the IPO. This would raise the value of the company to $25 billion in enterprise value, based on 18 times the consensus for revenue in 2015.
Varna Capital’s Svetlana Lee said that she is “not looking at the Twitter IPO, since there seems to be way to much hype and media attention.” She said that she tends to prefer “under the radar screen, misunderstood, or unloved opportunites.”
Rob Romero, the portfolio manager at Connective Capital Management has also noted that he does not plan to invest in the stock. He says, “At the current valuation, the revenue model is not established enough…”
To Invest Or Not To Invest
So, what will you do tomorrow? Will you sink your life savings into the popular micro-blogging site, or will you wait to see if the company follows the example set by Facebook Inc. (NASDAQ:FB) last year and tank? Let us know what you think in the comments below.
Disclosure: Author has no position in any stocks mentioned, nor does he plan to initiate one in the next 48 hours.