All eyes are on the New York Stock Exchange on Thursday to see whether the Big Board can pull off Twitter’s stock sale without the damaging glitches that plagued Facebook’s trading debut last year.
NYSE Euronext staged a first-ever weekend test for the initial public offer two weeks ago to avoid reprising the problems with rival Nasdaq’s systems that delayed timely orders and ruined Facebook’s debut on Wall Street. Member firms submitted large trading orders that successfully showed the exchange could handle high message volume and quickly notify traders their orders had been executed.
Exchange officials and Twitter’s bankers want to avoid the problems that gave a black eye to Nasdaq — plus charges of securities violations by the Securities and Exchange Commission and a record $10 million fine for any exchange. The technical concerns were magnified by other high-profile failures for U.S. exchanges. An August breakdown paralyzed trading in Nasdaq-listed stocks for three hours, while the 2010 “Flash Crash” saw the Dow Jones Industrial Average boomerang 1,000 points down and back up in just a few minutes.
The Oct. 26 test was successful, said Scott Cutler, the exchange’s global head of listings. Moreover, the exchange handled 10 IPOs last week without a hitch — and has six, including Twitter, slated this week, he said.
Nanex CEO Eric Scott Hunsader, whose firm supplies market data to the financial industry, said he’d be surprised if the exchange had IPO-related problems for Twitter, which priced its IPO at $26 a share Wednesday night. Still, he cautioned that some NYSE stock quotes were delayed for seconds at a time during Monday’s trading, a likely sign the exchange’s “systems were stressed.”
Any reprise of Facebook’s snags also seems unlikely because Twitter is expected to raise roughly one-eighth the $16 billion raised by Facebook, said Kathleen Smith, principal of IPO fund manager Renaissance Capital.
Still, the offer is up tobetween 10 and 30 times oversubscribed, which means the stock could come under intense buying and selling pressure when it starts trading under the symbol TWTR, says Dan Miller-Smith, CEO of Syndicate Pro, an IPO research firm.
“Demand is strong enough that the stock will rise a lot (after trading starts), we think more than 30%,” Miller-Smith said.
USA Today
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