Some People Might Make A Lot Of Twitter Money Today

Twitter IPO’d! Which means that early Twitter employees and investors are probably going to make mad bank, and the rest of us get to speculate about What It All Means without really knowing what we’re talking about — my favorite pastime!

No, I will be the first to admit I know next-to-nothing about companies going public (*hangs head in shame* / not really). I’ve certainly panic-read my fair share of stock option Wikipedia entries, but I’ve never worked for a company that has IPO’d, or even come close (yet…Mike & Logan?). What I do know is that their ticker name is TWTR, and while I know they’re all like that, there is something so beautifully and perfectly Web 2.0 about it (vwls are for n00bs).

Fear not, though, as trusty Heidi Moore has a terrific and accessible explainer over at the Guardian today that helped me understand how public offerings work, even if I don’t really care about What It Means.

If you want to get it, too, a little bit, this is a great place to start. She hits everything from how the prices get set in the market …

That means, if I have this right, that when we “ooh” and “aah” over Twitter being worth $13bn, that’s really just what a few roomfuls of rich investors said the company was worth?

Yes.

… to the back and forth that happens in an SEC filing, and the “roadshow” (really what they call it!) the company goes on, where they visit mutual funds and university endowments haggling over the opening price:

The company thinks it’s great, but it has to make its case to the people with money. That’s those powerful investors, like mutual funds and university endowments with millions to spend.

So the haggling starts: the investors ask hard questions of the company’s executives and bankers. The bankers try to answer without making the company look bad. After that, the bankers go around and ask the investors how many shares they would buy and how for how much. And then the market value of a company, of course, is just how many outstanding shares it has multiplied by the price of those shares.

Once you read this piece, you can graduate to the insanity of monitoring StockTwits. It’s up to $48/share as of my writing this — but will it drop before close? Ahh, I kind of hope so (out of spite? Unsure). Just remember when you open that tab that TWIT is right there in the name, ok?

Photo: wiselywoven

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