Twitter snubs IPOcalypse host Nasdaq in favour of NYSE Twitter has revealed that it has snubbed the tech-heavy Nasdaq market in favour of the New York Stock Exchange (NYSE) for its IPO. Twitter's Nasdaq snub may have something to do with that exchange's mishandling of Facebook's market debut last year, the last highly anticipated tech IPO. In an event that came to be known here …
Why? If people think something is worth something then it is. The only thing that creates worth is how many people value it, thats how things are with all things in life. If nobody values a piece of art, it creates no value, if many people place a high value on it, it commands a high sale price, in reality its constituent parts are worth a couple of pounds in materials.
The art analogy seems flawed: I doubt you can float or trade shares in a Rembrandt painting. IIRC someone - was it David Bowie? - tried to wrap profits from future performances in a bond once. Whether you would get a personal slave in case of default was not clear at the time, but it shows, theoretically, that you may try to securitise, e.g., profits from exhibiting a painting that you own.
Having said that, your objection to the OP is valid, IMHO: people will trade on the expectation that the company will make a profit. A share in Twitter is worth something whether or not it made a profit or a loss last quarter, and the market may decide that it is actually worth $20. Or then it may not...
I think so I am?
How do you think the railways got built in the 19th Century? Floats of non profit-making companies. In fact, lots of them didn't have any assets at all, they were using the markets for the original purpose, to tap up investors for cash, to invest in doing something useful. Then they took the money and used it to build nice profitable railways.
Well, apart from the ones who just stole it, or bought all the supplies at inflated prices from their own companies, or built loss-making routes into markets with very few passengers... Sadly the railway boom was very much like the dot.com boom - lots of great companies were created and survived to do useful things, lots of investors lost lots of cash on the others. A few people ended up with lots of other peoples' money or in prison.
Even with the permanently running Ad Block Plus on Android you will still end up seeing those wonderful "promoted tweets" and the new annoyance of "top tweets". No wonder they started cracking down so hard on third-party apps. It's the only way to avoid the constant stream of money spinning ideas thrown at you in their desparate bid to make more money.
I mean I watch a bunch of CNBC each day for entertainment value(I don't have a dime invested in anything in the "markets" it's all rigged - the more I see every day the more I believe), and I saw the hubub when the facebook ipo thing went down. In the grand scheme of things it seems like it doesn't matter. Sure, Nasdaq had some glitches (and a few more recently) but it's not as if they are some shady operation that doesn't know what they are doing. They are still a top tier player in the market place. Most places don't report that both NYSE and Nasdaq have been cutting costs internally because competition is so fierce - that certainly can't be helping.
Some investors got their feathers ruffled as a result of the facebook IPO but that really has more to do with people having the wrong assumptions (e.g. believing based on past experience that if they request 1000 shares of stock they may only get 10 shares so instead they request 100,000 - and look! whoopsie! this time they got the 100k and they didn't *actually* want it.. *hrmph*). Those folks probably should of just waited a week before buying anything. Oh, you wanted to try to get in on the IPO itself to flip it? Well that's part of the risk you take.
At the end of the day the client will IPO - sell a bunch of their stock and then let the public/market handle it. It's not as if the company is intimately involved in the trading of their stock each day (at least I've never seen an indication this was the case). They got their initial cash from the IPO and they are happy.
Markets do what they do, stock prices will do what they do and life goes on.
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