Is Twitter Priced Too Conservatively?

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Nov. 7 (Bloomberg) -- Bloomberg Contributing Editor Nick Thompson and Bloomberg's Jon Erlichman and Critina Alesci discuss Twitter's IPO debut on Bloomberg Television's "In The Loop." (Source: Bloomberg)

Our people buzzing about the fact that twitter is raising $120 billion, pricing above its range, and it has not made a single penny of profit?

Betty, first of all, the nyse is decked out in the little blue bird today.

But yes, people are wondering what is twitter going to start to turn a profit.

It is more expensive than facebook, however, some people think it is so price to conservatively.

Some people thought it could go as high as $30. they ended up going with $26 per hour cristina alesci says it is price for a bomb, they are looking for a bob.

Psychologically very -- a bump.

Psychologically very important geared rights they want to make sure they play it safe and want to make sure that this is going to be a celebrated ipo.

And that is going to go smoothly.

Let me bring in joining me as always costolon, -- let me bring in jon.

Are we going to start to see advertisers flee the company?

I heard one of your guests talking about that last hour.

I do not think that is the case.

As you think about what has happened with the facebook, they slip shares would slot something like half their value in the first three months of trading.

What we talk so much about?

The fact that facebook's advertising story has been on this search.

It has more to do with how effective ads are.

If advertisers feel they're getting good bang for the run from twitter -- bang for their buck from twitter, and i can go different ways.

This return based on sales tied to that advertising, if that is happening, then i think it really gets happy.

To the point about profitability, the company's ad products will get better if they spend more money to build that business.

That is why the people behind twitter are not focus on profit right now.

And why they dodged questions about profit ability on the roadshow.

It is not a priority today.

Maybe down the road.

Stay with me, jon, and also emily.

Nick, let it get your take on this, the profitability or lack of profitability.

There is no profitability, but in a way that is not really matter.

It is very early, they are a very immature company.

We all know the profitability is going to come, some of the trends going the wrong direction, but the basic trend is this company is going and it has only been trying to make money for a little while.

So yes they are not profitable right now, but that does not really matter.

It makes it incredibly confusing to figure out what their valuation is, which is why people see a lot of fluctuation in the price in the short-term and medium-term.

Ok, emily, our people on the floor there, are any of them talking about the valuation here in twitter and saying in any way that when in doubt that it should be valued at the level?

I think you both people that she available sites.

But that a company like amazon.

Almost two decades later, they're still not profitable, but that has been ceo jeff bezos' choice.

It is the same with twitter to a certain extent.

They have been making acquisitions.

They have been investing in talent.

They have been investing abroad.

Dick costolo can pull the lever 21 stew and turn a profit, but he has not thought it is important yet.

Now they have raised $120 billion, so it will be interesting to see where they put that money and of course the $1.8 billion, the business can do almost anything.

They have a nice cash cow there.

They do.

Can there to -- compared to amazon, it also raises the biggest danger for twitter which is that it is in an industry with almost zero value dan -- not zero, you need to get people, amazon is in an industry with huge barrier incentive.

The reason amazon have a crazy valuation is the expectation that it will keep building, no one can compete with a, it will eventually crush everyone have a monopoly.

Twitter is in a much more difficult spot where somebody could pop up, do the same thing, and you could go to twitter in a day.

I just have some news here that we have gotten exclusively at bloomberg where to sources familiar are saying that twitter is going to see the first trade for the ticker system between 10:30 and 11 a.m. eastern time.

Fully an hour after the open here in the u.s. i get, the trader going to happen between 10:30 at 11:00 a.m. eastern.

Jon, i imagine that twitter headquarters, they will be watching that stock price for a closely.

Tell me how they are leaning?

Well, you know, think about some of the very high-profile ipo's out of semper cisco and silicon valley for the last couple of years.

Facebook, a big splashy realization on the facebook campus, zynga, a bell from their office here in san francisco.

Those were both nasdaq ipo's, anyway the new york stock exchange does things is a little bit different.

It is not like you're going to have employees here as part of the bellringing process, but absolutely everybody is interested in what is going on to your day went be part of that process.

As we reported, the goal is for this office to be closed to outsiders, nonemployees today because this has become a bit of a landmark in the city.

People go through all the time and want to see what is going on inside of twitter, they want to see the hashtags and a twitter handles for the lunch offerings in the building.

It is the day to refletct, basically they're quacks do think they have that done a good job different jennings himself from facebook?

-- basically.

Do you think they have done a good job differentiating themselves from facebook?

Quite the whole thing has been differentiating themselves from facebook.

They have managed efficiently, they have managed it quietly, they have not messed up.

This is the crazy thing about twitter -- management twitter has been very good compared to facebook and the ipo roadshow, yet you litter is one of these countries that is not run by its founders.

This is a company where the founders are off throwing rocks at each other, and the company is just being run smoothly -- if indeed the shares are trading at 10:30, then when are they going to start like that facebook.

It will be another intervention that they have done well.

Nick, you are staying with me, nick thompson, in fact, the

This text has been automatically generated. It may not be 100% accurate.

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