Twitter is officially going to an initial public offering (IPO) and has chosen the New York Stock Exchange (NYSE) to do it. In order to avoid the problems that caused so much controversy during the Facebook IPO on Nasdaq, however, NYSE is taking no chances and has made a trial run of a Twitter IPO to test their systems, according to Reuters.
The NYSE Euronext does systems tests every weekend when exchanges are down, but this weekend was the first time, Reuters says, that they’d done a simulated IPO at the request of its members. Many of those member firms who are so interested in the Twitter IPO were involved in (and likely burned by) the Facebook IPO last year on Nasdaq.
The test seemed to make sure of two things: that systems could handle the amount of traffic likely in a huge IPO like this and that orders would be promptly processed and reported without delay. Both things that plagued the Facebook IPO in 2012 and caused confusion, anger and lawsuits.
Twitter will go public sometime later this year or early next – possibly as early as November – and will sell 70 million shares at $17-$20 per. Facebook sold 421 million shares at $38 each when it debuted, so this is a smaller, but possibly more significant IPO in technology.
It took nearly a year for Facebook to recover from its losses after the debut debacle’s repercussions hit its offering price. Nasdaq has not been so lucky, paying out tens of millions in compensation and paying the largest fine ever given to an exchange by the Securities and Exchange Commission – $10 million. NYSE is seizing the opportunity to become the tech-exchange of choice and obviously wants nothing to go wrong when their largest new tech IPO hits the public.