Morning Joe   |  November 07, 2013

Wait six months to buy Twitter stock?

Top Talkers: Twitter is set to begin trading Thursday on the NYSE, with an IPO price of $26 a share, the largest IPO to debut since Facebook. Twitter has a market value of $18B. Steve Rattner brings charts comparing Twitter to Google and Facebook.

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This content comes from Closed Captioning that was broadcast along with this program.

>> we'll get back to this but we have another big story this morning. later today twitter will begin trading on the new york stock exchange . the company has listed its initial public offering at $26 a share. it's the largest technology ipo since facebook debuted last year.

>> so steve should willie and i buy this stock?

>> willie asked me that before. i didn't want to answer off camera.

>> i know. i heard that. i pretended i didn't hear it. i asked you on camera.

>> steve, should i buy twitter? let's talk about the price. $26 a share at ipo . a little bit higher than people expected.

>> sure because what happens in an ipo they go through a marketing process and there was a lot of demand for this. they kept raising the price at which it would be offered up to $27. it's interesting to compare twitter to two other big ipos, facebook and google . let's start by look at how long these companies have been in business because this gives you a baseline. google had been in business six years when it public. facebook eight. twitter seven. here's the big difference. google had $3 billion. facebook had $5 billion and twitter has $640 million of revenue when it's going public . much smaller company. same is true as of profits. google was making money . facebook was making a tiny bit of money. twitter is losing money. so that gives you a little bit of the background.

>> is there a chance to sell ads on twitter.

>> they will sell ads.

>> tougher for facebook . that's because you cut in specifically to your interest, people can see what your timelines look like.

>> facebook does that too.

>> they don't do it well.

>> they do it to the tune of six or seven billion ad revenue.

>> they've gotten better.

>> who is that?

>> facebook .

>> they were doing better?

>> they were doing poorly.

>> the stock is up.

>> we said -- we called it.

>> all right so when you translate that whether you should buy the stock or not one thing you should look at is where will this come as a multiple. when google went public it was the two times its revenues. facebook was at 20 times its revenues and twitter is 28 times its revenues. this is coming at a much higher multiple than the other two. you can factor that into your decision as to whether to buy or not. i want to give you one last word of caution, willie . they don't always go up. here's what happened to five recent ipo , companies you all know. six months after the ipo gogle had doubled. linkedin was up 60%. facebook down 40%.

>> maybe you wait six months.

>> now facebook has since recovered and is up about 30%. google has done great. linked in has done great. zynga and groupon is still sitting down there.

>> on wall street , what are the potential down falls to investing in twitter and what's the big upside for twitter?

>> the downfall is the stock is very expensive and is predicated on twitter continuing to grow at a fast rate and if they slip a step as facebook looked like they were doing which is why that stock plummeted, then the stock could collapse. the upside is that as joe said it's a very fast growing service. it's got 650 million revenue. and, you know, google today, if you bought google at its ipo it's up 12 times since its ipo .

>> sounds like a buy to me.

>> it sounds like a buy.

>> it's bet. take the money you were going to put on the horses willie .

>> by the way, the dog --

>> buy with money you can afford to lose.

>> you can't get through that wall of trust. i can't believe it.

>> you knew i was going to be a hedge fund guy.

>> you're a born hedge fund guy.

>> other than that i was going to be -- i am.

>> you would be a great hedge fund guy.

>> coming up on " morning joe " we're going to talk to former white house press secretary to president clinton , deedee myer, chuck todd will talk to us later and later actress debra jo rupp playing a sex therapist .

>> dr. ruth?

>> no along the same lines.

>> really?

>> the thing we got to do --

>> nicole, you might want to be here for this one. anyhow, also more on today's big twitter ipo , the author of a brand new book. up next the top stories in the politico playbook. speaking of dr. ruth.

>> don't go there with him.

>> the sex therapy session is what time?

>> what do do i?

>> here's bill karins with a check on the forecast.

>> good morning, everyone. today we have a little bit of light main heading through the northeast and mid-atlantic. not too significant to cause too many delays but washington, d.c., philly, new york, boston and our friend in the pacific northwest have a pretty good storm. seattle and portland airport concerns. you can see the light rain on the map. two to three hours from syracuse to binghampton to scranton and work its way through new england. bring the umbrella with you. as far as the heaviest rain going targeting southern new england , central new england around 2:00 this afternoon a lot of you will drive to work. the rain will be over with during the day. when you drive home the roads should be cleared out. we'll be watching the rain ending this morning and there is like pittsburgh the middle of the country you're dry and cooler today and i mentioned that storm in the northwest. have you heard about this super typhoon ? this is sue per typhoon yolanda. one of the bigger stories of the world. it has 12 hours until the strongest storm on the planet this year makes landfall in the central philippines. look at the center eye on this. this is equivalent of our category 5 hurricanes we get like a katrina so we feel and wish everybody in the philippines the best as that huge typhoon makes landfall later this evening. here's a shot of washington, d.c. low clouds on the horizon. we'll be watching for rain later this afternoon. you're watching " morning joe ". i have a 401k retirement