It's the most anticipated IPO of the year: Twitter has filed an S-1 form with the SEC, its first step on the road to selling shares on the public market. But, as the microblogging social network plans to go public, are they selling out at the top?
The comparison between Twitter and Facebook are inevitable. Both are relatively young companies (Twitter was started in 2006, two years after Facebook). And, both started off perceived as something just for a young demographic.
As well, both have become huge social and economic phenomena that transcend their businesses. Twitter and Facebook have become the way news is shared and both were integral in the early days of social upheavals such as the Arab Spring (during which Saudi Prince Alwaleed bin Talal invested $300 million in Twitter).
Details on Twitter's business right now remain somewhat a mystery. That's because under the new JOBS Act, companies with annual revenues of less than $1 billion can file their S-1 forms in secret until 21 days before its "road show" to investors. But, questions remain as to whether Twitter fully cash in on its reach. Facebook was criticized by Wall Street for not being maximizing the way it "monetized eyeballs" and was nearly half its IPO price of $38 within a few months of going public in 2012.
That changed, of course, and now Facebook is trading near $44.
In fact, what's happening with social media company stocks in the last three months – led by Facebook – is nothing short of incredible. Since mid-June, Facebook is up 89%, LinkedIn is up 45%, and Sina (owner of Chinese microblogging site Weibo) is up 49%. Social media companies as a whole, as measured by the Global X Social Media Index ETF (SOCL), are up 33% in the past three months and 49% for the entire year.
That raises the question: Is Twitter selling out at the top or is going public at just the right time for investors?
To answer that question, Talking Numbers talks numbers with CNBC contributor Gina Sanchez (@GinaVSanchez), Chairwoman and Founder of Chantico Global, on the fundamentals of the industry. Looking at the charts is Jonathan Krinsky (@jrkinskypga), Chief Technical Market Analyst at Miller Tabak.
Are social media stocks the way to go for investors or will companies like Twitter eventually be for the birds? Watch Sanchez and Krinsky analyze social media and decide for yourself.
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