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Facebook announces secondary offering of 70M shares as it joins S&P500 Index | TechCrunch

Facebook announces secondary offering of 70M shares as it joins S&P500 Index | TechCrunch | Cultural Trendz | Scoop.it

Some steps ahead for Facebook in its life as a huge public company: it’s selling some 70 million shares worth around $4 billion in a secondary offering and joining the S&P 500 Index, while Zuckerberg is will be making a philanthropic gift of 18 million Class B shares, worth potentially $1 billion.

The social network today announced that it would be making an offering of 70 million shares of Class A common stock — 27,004,761 shares from Facebook, and 42,995,239 shares from “certain selling stockholders,” with 41,350,000 shares coming from CEO and co-founder Mark Zuckerberg, and 1.6 million shares from VC Mark Andreessen.

Going by the closing share price on December 18 of $55.57/share, this would value the sale at nearly $3.9 billion. The actual price will be determined at the close of market today, Thursday, December 19.

Standard & Poor’s is adding Facebook’s Class A common stock to the S&P 500 Index — a measure of the company’s influence on the wider market. It will mean that shares of Facebook’s Class A common stock will be offered “primarily to index funds whose portfolios are primarily based on stocks included in the S&P 500 Index.” It’s getting added at the close of trading on December 20, 2013.

Facebook does not give any specific details about how it would use the capital raised in the offering, but there are a few things to note here:

First, Facebook notes that it will be used for working capital and general corporate purposes:

“Our principal purpose for selling shares in this offering is to obtain additional capital. We intend to use the net proceeds to us from this offering for working capital and other general corporate purposes; however, we do not currently have any specific uses of the net proceeds planned. Additionally, we may use a portion of the proceeds to us for acquisitions of complementary businesses, technologies, or other assets.”

This is a fairly routine reason given for secondary offerings, except that on the subject of acquisitions, Facebook has been in the news of late. Specifically, it had been rumored to be eyeing up the hot new ephemeral photo messaging app Snapchat, reportedly making an offer to buy it for $3 billion — raising money today potentially puts Facebook into play to acquire something, if not Snapchat.

Second, part of the reason for secondary offering is because you when you are added to S&P 500 Index you have access to more investor capital so it makes sense to release shares at that time.

Third, Facebook notes in its S-3 form the ongoing legal case around securities violations during its IPO last year and “seeking unspecified damages.” It further notes that “We believe these lawsuits are without merit, and we intend to continue to vigorously defend them,” but also that “Such lawsuits or inquiries could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.” This potentially could be one other area where the proceeds of this offering may get used.

Regardless, Facebook notes that it “will not receive any proceeds from the sale of shares of Class A common stock by the selling stockholders.” In particular, Zuckerberg’s proceeds from the sale will be used to pay down tax obligations: “to satisfy taxes that he will incur in connection with the exercise, in full, of an outstanding stock option to purchase 60,000,000 shares of Class B common stock.” The 27 million shares being sold by Facebook, at yesterday’s closing share price, works out to around $1.5 billion.

Charitable donations
The filing also lifts the curtain a bit on the extent of Zuckerberg’s philanthropic efforts. It notes that Zuckerberg intends to make a gift of approximately 18,000,000 shares of Class B common stock this month. The donation of these shares, a spokesperson tells me, will go to the Silicon Valley Community Foundation, which includes Zuckerberg’s educational and life sciences charitable efforts.

“These shares will be converted to Class A common stock in connection with Mr. Zuckerberg’s donation,” Facebook notes in the filing. There is no way to forecast what the value of the Class B stock will be when he decides to convert those shares to cash, although, again, going by the share price yesterday, this works out to just over $1 billion.

Facebook notes that J.P. Morgan, BofA Merrill Lynch, Morgan Stanley and Barclays are joint bookrunners for the offering. BNP Paribas, Citigroup, RBC Capital Markets, Credit Suisse, HSBC, Standard Chartered and Piper Jaffray are co-managers for the offering.

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Twitter share price opens at $45.10 as value surges on Wall Street debut

Twitter share price opens at $45.10 as value surges on Wall Street debut | Cultural Trendz | Scoop.it

Twitter made a spectacular debut on the New York stock exchange on Thursday, with its soaring share price valuing the company at over $25bn. It was an extraordinary debut for a company that has never made a profit and whose business model depends on selling advertising on a scale significantly higher than it currently achieves.

The company set a share price of $26 on Tuesday but fierce bidding for the limited number of shares available drove that price up to over $45 as the stock market opened, a rise of 73%. In early trading, the price increased even further, at one point topping $50.

It instantly made billionaires of co-founders Ev Williams and Jack Dorsey. Williams owns 59.6m shares, valued at more than $2.5bn at $45.10 a piece. Dorsey holds another 23.4m shares, valued at over $1bn.

At $25bn Twitter is being valued at 25 times next year’s projected earnings of $1bn. That same multiple applied to Apple would be equal the entire annual economic output of Germany, said Tomas Freyman, director of valuations at BDO. “This is a company with $600m of revenues and no profits,” he said. He said the company would have to “put up some serious numbers soon” to justify the price.

The massive spike worried some analysts. Brian Wieser of Pivotal Research, an independent research firm, sent a note to clients Thursday morning advising them to sell. “With a price that pushes into the high 30s and beyond, Twitter is simply too expensive,” he wrote.

The seven-year-old company now claims 200m users worldwide and has 53m active users in the US, where it makes most of its advertising revenues. It has never made a profit: in the first nine months of this year, Twitter posted a loss of $134m. Facebook, the last big tech IPO, now has over 1bn users – its profits grew to more than $1bn before it went public.

Twitter is big on mobile, the fastest-growing area for advertisers and one where others, including Facebook until recently, have struggled. In September the company bought MoPub, which manages online ad sales, for a reported $350m. The company will allow Twitter to sell its expertise in mobile advertising to other parties and its purchase was seen by analysts as a critical move in growing revenues.

But analysts question whether its advertising targets are achievable. "Twitter’s entire business model is based on advertising – not on the ads it has, but on the ads it hopes one day it might get," said Larry Chiagouris, professor of marketing at Pace University in New York.

Patrick Stewart, the award-winning actor best known for portraying Captain Jean-Luc Picard in Star Trek, was at the NYSE to ring the opening bell on Twitter’s behalf. He was joined by Vivienne Harr, a nine-year-old who set up a lemonade stand to protest against child slavery, and a representative of the Boston police department.

Twitter share price opens at $45.10 as value surges on Wall Street debut
Twitter makes spectacular start to life as a public company thanks to rocketing share price that values firm at $31bn

Twitter IPO. Twitter: making a splash. Photograph: Reuters

Twitter made a spectacular debut on the New York stock exchange on Thursday, with its soaring share price valuing the company at over $25bn. It was an extraordinary debut for a company that has never made a profit and whose business model depends on selling advertising on a scale significantly higher than it currently achieves.

The company set a share price of $26 on Tuesday but fierce bidding for the limited number of shares available drove that price up to over $45 as the stock market opened, a rise of 73%. In early trading, the price increased even further, at one point topping $50.

It instantly made billionaires of co-founders Ev Williams and Jack Dorsey. Williams owns 59.6m shares, valued at more than $2.5bn at $45.10 a piece. Dorsey holds another 23.4m shares, valued at over $1bn.

At $25bn Twitter is being valued at 25 times next year’s projected earnings of $1bn. That same multiple applied to Apple would be equal the entire annual economic output of Germany, said Tomas Freyman, director of valuations at BDO. “This is a company with $600m of revenues and no profits,” he said. He said the company would have to “put up some serious numbers soon” to justify the price.

The massive spike worried some analysts. Brian Wieser of Pivotal Research, an independent research firm, sent a note to clients Thursday morning advising them to sell. “With a price that pushes into the high 30s and beyond, Twitter is simply too expensive,” he wrote.

The seven-year-old company now claims 200m users worldwide and has 53m active users in the US, where it makes most of its advertising revenues. It has never made a profit: in the first nine months of this year, Twitter posted a loss of $134m. Facebook, the last big tech IPO, now has over 1bn users – its profits grew to more than $1bn before it went public.

Twitter is big on mobile, the fastest-growing area for advertisers and one where others, including Facebook until recently, have struggled. In September the company bought MoPub, which manages online ad sales, for a reported $350m. The company will allow Twitter to sell its expertise in mobile advertising to other parties and its purchase was seen by analysts as a critical move in growing revenues.

But analysts question whether its advertising targets are achievable. "Twitter’s entire business model is based on advertising – not on the ads it has, but on the ads it hopes one day it might get," said Larry Chiagouris, professor of marketing at Pace University in New York.

Patrick Stewart, the award-winning actor best known for portraying Captain Jean-Luc Picard in Star Trek, was at the NYSE to ring the opening bell on Twitter’s behalf. He was joined by Vivienne Harr, a nine-year-old who set up a lemonade stand to protest against child slavery, and a representative of the Boston police department.

    .@twitter owes success to its users, so gives #NYSEBell to @sirpatstew, @vivienneharr & @bostonpolice #TwitterIPO pic.twitter.com/f5eqc0Xjht
    — (NYX) NYSE Euronext (@NYSEEuronext) November 7, 2013

Twitter’s share price was increased three times before the initial public offering (IPO).

Twitter had originally estimated a price range of $17-$20, but on Monday that was upped to $23-$25. The price was further increased to $26 on Wednesday. But huge demand for the 70m shares put on sale by the company sent the price soaring.

“We knew Twitter shares would be in high demand, but this still goes down as hugely impressive, and is further evidence of the hunger to invest in innovative new media type," said Joshua Raymond of the analysts City Index. "IPOs are, of course, highly volatile, so while this would appear to be a very successful market debut for Twitter, we must take a step back and judge investor appetite over a longer period of time,” he said

The company had appeared keen to avoid a first-day “pop” of this magnitude. Big “pops” on internet stocks have in the past been followed by significant falls. But it was also keen to avoid the fate of Facebook which priced its shares too high and took a year to recover from its disastrous IPO last May.

Before the pricing, Tomas Freyman, director of valuations at BDO, worried that history was about to repeat itself. "Despite Twitter's price range valuing being more modest than some of the numbers bandied about over the last few weeks, this is still very high for a company that has yet to make any profits," he said.

Emmett Kilduff, CEO of Eagle Alpha, a company that analyses online data, said Twitter needed to improve its ad platform if it was to grow revenues. Eagle Alpha recently published a report looking at online views of Twitter from advertisers. “”Ease of use was a big thing for advertisers. If a small business uses Google’s AdWords [Google’s main advertising product], it’s incredibly simple. Our feedback was that was not so for Twitter. It’s just not intuitive.”

Read more: http://www.theguardian.com/technology/2013/nov/07/twitter-ipo-stock-share-price

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Everyone at the NYSE was talking crap about the NASDAQ this morning

Everyone at the NYSE was talking crap about the NASDAQ this morning | Cultural Trendz | Scoop.it

Today was a big day for the New York Stock Exchange.

It had the Twitter IPO, which in years past might have gone to the NASDAQ, which has successfully attracted most technology companies that list.

But, the NASDAQ botched the Facebook IPO, and so Twitter decided to go with the NYSE.

On the trading floor today, just about everyone associated with the NYSE was not-so-subtly trashing the NASDAQ process for IPOs.

The entire conversation around Twitter's opening price was about the "human" element. At the NYSE, they take in all the orders from investors and establish a stable price, then they opening for wider public trading.

This way, according to the NYSE, there is no massive spike, or drop in the stock when it starts trading. And, indeed, that's what pretty much happened. Twitter opened at $45.10, briefly jumped to $50, then settled in at ~$46.

The NASDAQ is different. The orders are submitted electronically then sorted out that way. This process broke during Facebook's IPO and the trading didn't start till later than expected. When it did trade, some people complained that their orders weren't right.

When Twitter's IPO was taking longer than expected to price, NYSE people kept saying something to the effect that this is the benefit of having people involved. They can keep track of how the stock is being priced and make sure no one gets screwed.

One person said that IPOs are more "art than science" and they're based on sentiment, so you couldn't use computers or algorithms to really work on them in the early stage of trading.

This was the general message all morning: We have people keeping an eye on things, the NASDAQ doesn't.

And if that wasn't enough, after the Twitter IPO, Reuters made this infographic

Today was a big day for the New York Stock Exchange.

It had the Twitter IPO, which in years past might have gone to the NASDAQ, which has successfully attracted most technology companies that list.

But, the NASDAQ botched the Facebook IPO, and so Twitter decided to go with the NYSE.

On the trading floor today, just about everyone associated with the NYSE was not-so-subtly trashing the NASDAQ process for IPOs.

The entire conversation around Twitter's opening price was about the "human" element. At the NYSE, they take in all the orders from investors and establish a stable price, then they opening for wider public trading.

This way, according to the NYSE, there is no massive spike, or drop in the stock when it starts trading. And, indeed, that's what pretty much happened. Twitter opened at $45.10, briefly jumped to $50, then settled in at ~$46.

The NASDAQ is different. The orders are submitted electronically then sorted out that way. This process broke during Facebook's IPO and the trading didn't start till later than expected. When it did trade, some people complained that their orders weren't right.

When Twitter's IPO was taking longer than expected to price, NYSE people kept saying something to the effect that this is the benefit of having people involved. They can keep track of how the stock is being priced and make sure no one gets screwed.

One person said that IPOs are more "art than science" and they're based on sentiment, so you couldn't use computers or algorithms to really work on them in the early stage of trading.

This was the general message all morning: We have people keeping an eye on things, the NASDAQ doesn't.

And if that wasn't enough, after the Twitter IPO, Reuters made this infographic

Read more: http://www.businessinsider.com/the-nyse-was-not-so-subtly-talking-trash-about-the-nasdaq-all-morning-long-2013-11#ixzz2jzu30CtH

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What student debt? How the other millennials think about money

What student debt? How the other millennials think about money | Cultural Trendz | Scoop.it

NEW YORK - When Josh McFarland graduated from Stanford he owed $40,000 in student loans and couldn't fathom a way he'd ever pay it off and have a future for himself - not unusual for the typical young adult these days. Then he went to work for Google.

As a product manager, he got stock options and cashed them in over the five years he worked there. He married a fellow Google employee, so she had stock too. Then she moved on to Yelp, and he quit to launch TellApart, which provides technology solutions for e-commerce sites.

Now 33, McFarland has a 3-year-old and a newborn and no longer has to think about his student loan: His company has $17.75 million in venture capital investment. While he doesn't consider himself retire-now rich, his piece of the company affords him what he calls "breathing room" and what other people might call wealth.

McFarland is on the starting end of Generation Y, the cohort born in the United States after 1980 that is typically portrayed as saddled with massive student debt, underemployed and underpaid. More than a third of the 80 million group of so-called millennials live with their parents, according to the Pew Research Group.

But McFarland is part of the sizeable minority that is doing quite well: 12 million Gen Y-ers make more than $100,000, according to the Ipsos MediaCT's Mendelsohn Affluent Survey. Many of them, in technology fields, live frugal work-based lifestyles and a