An IPO for Twitter Essay Example | Topics and Well Written Essays - 1000 words

An initial pass for Twitter - Essay ExampleAn initial offering is an acronym that stands for Initial Public Offering which refers to the first sale of stocks by a in camera owned attach to to the public. initial public offerings are often used by younger and smaller companies to expand their business but are also used by privately owned large companies to become publicly traded (Investopedia, 2911). When Twitter makes the decision to go public along with their fresh commercial accounts and advertisement programs, it is best for Twitter to use an auction based initial public offering to acquire and charter more profit to the company. Auction based IPOs utilize the mesh to open the bidding of their stocks to interested investors. In order to underwrite the IPO, Twitter will need an investment bank. This would cost less compared to the traditional IPO underwriting process. A road show would be provided to educate investors about the companys offerings and the company itself. A dditionally, this fictional character of IPO is beneficial for Twitter because auction based IPOs open the bidding of their stock through the network allowing a larger set of investors to participate. Lastly, and most importantly, Twitter would have a share price scalelike to the grocery value as opposed to the share price in traditional IPO this would blind drunk there will be a higher return of profit for Twitter (Kadam, 2009). While in the traditional IPO, Twitter would designate a specific investment bank to underwrite the IPO. ... The true market value would be discounted from what Twitter and the investment bank came up with because this acts as the investment banks commission from Twitter. For this reason, Twitter would have a lower cost on the auction based IPO for the underwriting process. After identifying the number of shares that can be offered and the share price of the IPO. In the same way as an auction based IPO, a road show would be given to the investors to educate them about the offering and about the company itself. Once the road show is completed, shares are then allocated to investors. The advantage of using a traditional IPO is stocks are much higher than the initial price when the trading begins (eSSORTMENT, 2011). There are disadvantages with these types of IPOs. In an auction based IPO, it would cost them less capital if the company and the investment bank overvalue the value of the stock. If this occurs, the company would not meet their target capital, which translates in a shortage of funds for the companys expansion. Also, there would be less return of investments for investors because the share price in this form of IPO is close to the market value allowing the profits to flow in the companys favor (eSSORTMENT, 2011). some other example of a risk in using the auction based IPO is when the system gets prepare by a virus after opening the stocks for bidding to the interested investors. This occurrence would violate the stir and federal security laws of the investors. This obstacle can really happen because the opening of the shares is through the use of the internet making it very possible to get hit by the said virus (Hildreth, n.d.). The disadvantage in a traditional IPO is investment banks take