The Top 3 Reasons Twitter Chose The NYSE Over NASDAQ For Its IPO

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The NASDAQ Probably Never Had A Chance:

Twitter will be going public on November 15, 2013 and the debut is highly anticipated.  The buzz for the second most popular social media site is enormous and investors are licking their chops looking for another opportunity to gain exposure to the sector.  This week Twitter announced the company will be using the NYSE instead of the NASDAQ to list its new shares and speculation has already as to why the company made the choice.

Here are my top 3 reasons Twitter decided to go with the NYSE:

  1. The Facebook debacle- Twitter has learned the mistakes of its predecessor and wants to please investors by keeping unnecessary uncertainty as far away from opening day as possible.
  2. The opening trades and first days – the first few trades are extremely portably when a new issue comes to market. The Facebook IPO was unusual because for several minutes, investors had no idea if their trades were executed or not.  This led to people making several orders anxiously without having information about orders for a few days. The tech heavy NASDAQ was fined $10 million for the problems related to the Facebook IPO which was the largest ever for such an infraction by the SEC.  Twitter can’t knowingly jump back in business with the exchange because the negative history is rather -current.
  3. Reputational spillover effects- the a Facebook debacle hurt The NASDAQ’s credibility and the competition for new issuances is heating up. Twitter can’t have investors questioning their first few moves as a public company and after the Facebook IPO fallout, Twitter will come to market with clean hands regardless of how well the IPO executes.

Twitter made the right choice going with the NYSE but if the IPO has similar problems in execution, this could dissuade retail investors for years to come and fuels suspicions the ‘game is rigged’.  If the shares aren’t priced right, that really isn’t an issue in the long-run but a horrible start for two social media IPOs back to back could raise investor ire.

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