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Twitter IPO: 5 Tech CEOs Weigh In

Chatter about the possible deal is trending right now

By Tom Taulli, InvestorPlace Writer & IPO Playbook Editor

Twitter185With the surge in social media stocks like Facebook (FB), Yelp (YELP), LinkedIn (LNKD) and Pandora (P), investors are getting antsy for a hot IPO in the sector.

One thing many want to see: a Twitter IPO.

Of course, rumors of such a happening have been swirling for some time now, even though the CEO said earlier this year that he was “not even thinking about it. InvestorPlace‘s Jeff Reeves, for one, says talk about Twitter is premature.

Still, others think Facebook’s recent rebound sets the stage perfectly for a successful follow-up social media offering.

The bottom line: The question marks — surrounding whether a deal will happen and what the impact of a deal would be — are still pretty big.

To get some perspectives on these kinds of questions, I reached out to a variety of tech CEOs … and they all had some interesting things to say. Take a look:

Vineet Jain

vineetjainCEO & Co-Founder, Egnyte

“Given the string of successful tech IPOs this year, a Twitter IPO in the near future makes perfect sense. It’s a real business and the world’s most ubiquitous opinion sharing platform.

One caveat for a successful Twitter IPO: It must learn from Facebook’s mistake and avoid pricing the IPO too aggressively. A solid debut on the market has the potential to create immense value for the entire social sector — and beyond.

In my opinion, the IPO price should be designed to have at least a 20% to 25% pop post-IPO, and thereby benefit from the ‘halo effect’ of a successful IPO.”

Andrew Eye

andreweyeCEO & Co-Founder, Boxer

“When the highly anticipated Twitter IPO finally arrives, the initial reaction of the market is likely to be far more reserved compared to the excitement surrounding the Facebook IPO. It is unlikely that Twitter will be able to build the sort of initial demand seen by Facebook, unless they are willing to substantially undervalue their shares.

What is more interesting, however, is a comparison of the long-term prospects for these companies. The Facebook IPO appeared to have obvious untapped monetization opportunities in mobile and off-site advertising, and its deep demographic data positioned them as a real threat to Google’s (GOOG) online advertising dominance. In a pure advertising model, it is less clear where Twitter can go to further monetize their smaller user base.

That said, if its valuation on the secondary markets hold true and Twitter arrives on Wall Street with a market cap in the neighborhood of $9 to $11 billion, investors may look at Twitter as a steal despite the uncertainty of its long-term monetization options.”

Marcus Nelson

nelsonCEO & Founder, Addvocate

“The signs are aligning that Twitter will file soon for an IPO. I predict that investors will be happier with Twitter than they were in Facebook’s first year as a public company. Unlike Facebook, Twitter has never had to figure out what to be when it grows up — almost from the start, it’s been an incredibly powerful channel for marketing and delivering content.

For proof, just consider the lowly #hashtag, which has become part of the universal vernacular. Twitter is the first to break the news. It’s a constant presence of TV screens. It has reshaped politics and unleashed torrents of commentary (Sharknado, anyone?).

It’s this role as a marketing/media play that will drive Twitter’s sales and sustain growth as a public company. It’s also the key distinction that separates it from Facebook, which is — and always will be — an ad play. Only advertisers like advertising. Producers, marketers, politicians and consumers will continue to love and leverage their Twitter channels.”

Jeremy Greenfield

greenbergFounder, Divvy

“With Facebook’s stock finally at about pre-IPO pricing, it seems to be the perfect time for Twitter to get the ball rolling on its own public offering.

I don’t foresee Twitter having the issues that Facebook, Groupon (GRPN), and Zynga (ZNGA) faced, since Twitter has always been a ‘mobile-first’ company, and its revenue model should follow suit. Twitter maintains cash flow in the hundreds of millions and should break the billion dollar mark within the next 14-18 months.

As an investor, I would advise a ‘wait and see’ approach with Twitter. When a seven-year old tech company goes public, I expect to see some people cashing on their sweat equity.”

James C. Foster

jamesfosterCEO & Co-Founder, Riskive

“Twitter is a company that has steadily continued down a path toward revenue generation and profitability. The management team has done an excellent job integrating its technology within the business community while slowly growing sustainable revenues.

I would not expect any hockey-stick growth with them over the next two years, but can clearly see the opportunity for a 2 to 3 times return by 2015.

Investors should seek to buy into a Twitter IPO if the market cap is less than $18B and if they believe in the long-term viability of social networking growth.”

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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