Wealth managers hear 'nary a tweet' for Twitter's IPO

Oct 26 2013, 12:11 IST
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Dick Costolo, chief executive of Twitter, arrives at JP Morgan headquarters before the firm's IPO in New York. (Reuters) Dick Costolo, chief executive of Twitter, arrives at JP Morgan headquarters before the firm's IPO in New York. (Reuters)
SummaryTwitter has said it will sell 70 million shares at between $17 and $20 apiece.

Twitter Inc has set a relatively modest price range for its closely watched initial public offering, but some financial advisers say their clients are not clamoring to invest in the social media phenomenon.

"Nary a tweet," says William Baldwin, president of Pillar Financial Advisors in Waltham, Massachusetts, when asked about client interest in the deal.

Out of 29 broker-dealers and independent advisers contacted by Reuters, 23 said they are not recommending Twitter shares. Only one said he would recommend it - and only to certain clients. Five others said they would wait to snap up the stock if it plunges after it begins to trade on the New York Stock Exchange.

While retail interest might be low, tech industry analysts say there is expected to be a good appetite for Twitter stock from institutional investors at the current valuation. Actual institutional investor sentiment still remains unclear. Retail investors typically account for 10 to 15 percent of IPOs.

Twitter said on Thursday it will sell 70 million shares at between $17 and $20 apiece, valuing the online messaging company at up to about $11 billion, less than the $15 billion that some analysts had been expecting. If underwriters choose to sell an additional allotment of 10.5 million shares, the IPO could raise as much as $1.6 billion.

Blame last year's botched Facebook Inc IPO for the diminished interest from Mom and Pop in Twitter.

When the social networking giant's stock hit the market in May 2012, it encountered allocation problems, trading glitches and a selloff - shares did not recover their IPO price until a year later.

"People are still smarting from that experience," says Renť Nourse, a financial adviser at Urban Wealth Management in El Segundo, California. Part of the problem is that investors do not understand Twitter the way they "got" Facebook, Nourse and other advisers say.

NO CALLS ON TWITTER

Three brokers with Morgan Stanley, which was lead underwriter on the Facebook IPO, said clients are showing little or no interest in Twitter.

"With the debacle over Facebook, I haven't had one client ask about it," said one of the brokers, based in the southeast. The broker asked not be identified because they were not authorized to speak to the media.

Another broker, based in northern California, said, "Silicon Valley deals have been super-red hot, but I've had no inquiries from clients" about Twitter.

All in all, Twitter is no Facebook.

While Twitter relies on advertising like Facebook to make money,

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