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CPBJ Extra Blog

Twitter's stock exchange choice shouldn't be a choice at all

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When you're the first to do something in the financial world, there's always risk.

Luckily for Twitter, it has the luxury of being the second social media company to hit the open market — and it’s trying to minimize the risk it takes when it finally does offer stock to avoid the ramshackle of a mess Facebook trudged through in 2012. One of the biggest choices it will face is what exchange it will use to sell that stock.

Nasdaq is the usual choice of tech companies, but a report surfaced this week on that Twitter will choose the New York Stock Exchange. On Sept. 12, Twitter filed an S-1 with the Securities and Exchange Commission so that it can launch its initial public offering (IPO) of stock somewhere in the future. It made the announcement, of course, in a Tweet.

An S-1 is the required filing providing information on the planned use of the capital that is raised, the company’s business plan and other information.

Other than that, however, Twitter is staying mum on the details of the IPO. TheStreet’s sources cited logical reasoning and usual timing that sounds like the IPO won’t be available until late in the year, if not early 2014.

The numbers are staggering, according to that report. Between 50 million to 55 million shares would be offered to raise about $1.5 billion, leaving the company valued between $15 billion and $16 billion.

Now that Twitter knows it’s going to offer the IPO, it needs to choose where to sell it. TheStreet had the Tuesday report that it would choose the New York Stock Exchange. That was quickly debunked as premature, as CNBC reported Twitter was only “leaning” toward the NYSE and was still considered Nasdaq.

But let’s face it. Even if Nasdaq is the choice for many technology companies, Twitter should want to distance itself from the Facebook IPO as much as it possibly can, so that reporters and bloggers don’t go around calling Twitter a bunch of crazies for getting stuck in the same traps Facebook did.

In a court brief filed this summer, Facebook blames Nasdaq for much of its price drop during its IPO.

Nasdaq’s edge as the choice of tech companies is eroding, so it’s not like Twitter is beholden to its peers in the tech industry. Why would Twitter even consider going with Nasdaq?

So far, TheStreet hasn’t retracted anything or said it was wrong. I’ve been watching this play out this week and it makes me think of the season finale of HBO’s “The Newsroom” earlier this month. Producer Jim Harper mistakingly made an early call on an election, but purposely didn’t fix it because he was pretty confident the early call would turn out to right anyway (it did, of course). Maybe that’s what happened here with TheStreet. <i>“Oh wait, they didn’t actually choose the New York Stock Exchange yet? Well, that’s OK, I’m sure they will, then we’ll look really smart.”</i>

If Twitter does choose Nasdaq, it better have the mother of all justifications when it makes the announcement to the press and then be ready to see a couple months of “Has Twitter flown the coop?” headlines.

That’s not exactly the publicity it will look for headed into a watershed IPO.

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