What Does Twitter Need to Do Post-IPO?

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Nov. 8 (Bloomberg) -- Bloomberg Contributing Editor Paul Kedrosky reflects on Twitter's IPO. He speaks with Cory Johnson on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

The country with us?

I don't even know where i am anymore.

I'm assuming it is san diego.

I'm glad you are wherever you are.

What do you make of the goings on yesterday that you got to witness firsthand on the floor?

That was pretty remarkable.

I characterize it as watching the worst forced prom date ever, given the dynamic between these guys.

For whatever reason, the nyse does not want to talk about it that much -- watching the spread wide and as it went from the early indications, 44, 47, and why did -- widened out -- let's talk about that.

When the market first it's a new issue, they have a widespread.

It gets narrower and narrower.

The indication got wider what it should have been getting closer right before trading.

What was happening?

It was really interesting.

You could see this murmur of discontent work its way through, and then ripple out to the traders at the post behind as the spread widened out again.

It was supposed to lock in on a price.

It's not clear what happened.

What was interesting was the reaction, a couple of traders saying for letter profanity -- four-letter profanity.

I'm try to think which one it could have been.

What are the issues besides trying to decipher what four letter profanity options there were?

Was it feeds from brokers not coming in at the same time?

I think they weren't allowing market orders at all.

They were not, but it sounds like there were market orders coming in.

There are a number of stories floating around that were telling brokers at various firms that open market orders would not be accepted anymore, and then they said, this is crazy, we will not accept open market orders until after this starts trading.

That was part of the imbalance.

There were issues with their own proprietary data feed.

There was a moment around 10:15 where i felt my eyes rolling back in my head and i felt, we're about to do another facebook.

Seeing that spread wide and up at that point is not a good thing at all.

Listen to what the head of the new york stock exchange had to say to our own emily chang who was down there as well.

I was predicting 1015. we were trying to get the message out early that it was going to be a while, especially when i saw the opening indication was over $40, i had a feeling i was going to be wrong at 10:15. the evidence that we got it right, it has been in a fortified dollar range -- four dollars to five dollar range since the opening.

Is that because of the new york stock exchange and the people they're trading, or because goldman sachs was buying shares?

He makes a fair point that it did open and it was not a face plant thing.

This is not price discovery that happens at the end, or that happens post the initial trade.

This is price architecture that happens for the balance of the day.

It is a careful process where you want to present the appearance of price stability.

The way you do it is with the arcane aspects of the ipo process, but that is what your underwriters do for price stabilization.

What we watched was a master class in post offering price stabilization by twitter's underwriters.

You had 70 million shares offered, but what hundred 20 million shares traded that day.

How much money do you think goldman sachs put to use for that?

I was trying to do the math earlier, and it's hard to guess.

I have to assume it is substantial.

You do that math, you think about the number of shares that changed hands at the ipo price, and subsequently to the balance of the day.

This is a significant fraction of their trading capital on a daily basis.

If you look at the spikes in trading volume throughout the day, it's pretty suggested that a lot of this is about price stabilization.

This is not blocks changing hands between disinterested traders.

That is part of what you have to do on the first day.

That then goes away.

We're no longer in the business of architecting price, we're in the business of letting price find itself.

We saw a substantial 7% decline.

It was not the people showed up and were suddenly bottom fishing on this thing.

We will never confuse price stabilization with price discovery.

A lot of people did on that first day.

I'm glad you were able to make it back across the country.

You got to use all your mobile devices all the way on both flights.

Westbound, but not eastbound.


I'm serious.

I could only use it one direction.

Apparently bad people only travel in one direction.

Apparently, dante's advice as well.

Paul kedrosky, thank you very

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


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