The big news on the initial public offering front this week is the Thursday debut of social media outfit Twitter (NYSE: TWTR).
On Monday, the company raised is offering range to $23-$25 a share and sources believe the offering is oversubscribed even at the high end of that range. If all available shares are sold at $25, Twitter would have a market cap of $13.6 billion, valuing the company at 9.5 times 2014 sales, reports Michelle Jones for ValueWalk.
While institutional demand is seen as robust, demand from retail investors, possibly still scorned by the debacle following Facebook’s (NasdaqGM: FB) 2012 IPO, is slack. Only 19% had a favorable view of Twitter vs. 47% who had positive feelings for Facebook, according to Aaron Pressman for The Exchange.
Somewhere in the middle of feelings regarding the Twitter IPO are the exchange trade funds that make for likely home to the stock, namely the Global X Social Media Index ETF (NasdaqGM: SOCL) and the new Renaissance IPO ETF (NYSEArca: IPO).
IPO, which is not yet a month old, tracks the rules-based Renaissance IPO Index and that index gives IPO the ability to add Twitter within five days of the stock’s debut. SOCL’s issuer has already confirmed it will add Twitter, though it did not say when the stock will be added to the high-flying ETF’s lineup. {Twitter IPO Icing on the Cake for Social Media ETF]
Neither Twitter’s rising offering nor the ability of IPO and SOCL to add the stock soon after the IPO have done much for the ETFs. In the past week SOCL is up 0.6% while IPO is up 0.3%. IPO is down 1.3% since its October debut. [Just in Time for Twitter, IPO ETF Debuts]
To IPO’s credit it has raked in $28.2 million in assets, according to Renaissance Capital data.
Assuming Twitter’s market cap sticks at $13.6 billion during the first day of trading, the stock would be slightly larger than Worday (NYSE: WDAY), IPO’s sixth-largest holding. At $13.6 billion, Twitter would also be more than twice as large as IPO’s fifth-largest holding, Realogy Holdings (NYSE: RLGY).
At that value, Twitter would also be more than quadruple the size of Zynga (Nasdaq: ZNGA) and more than double the current size of Yelp (NasdaqGS: YELP), SOCL’s seventh- and eighth-largest holdings, respectively, indicating the stock could take on a fairly prominent role in that ETF.
Regardless of Twitter, IPO has endured some criticism since its debut. However, as of Nov. 1, the ETF’s underlying index was up almost 51% in the past year.
Renaissance IPO ETF
