Will Twitter Learn the Lessons From Facebook’s IPO?

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Oct. 25 (Bloomberg) –- Buzzfeed Deputy Tech Editor Charlie Warzel, Bloomberg Contributing Editor Paul Kedrosky and Bloomberg’s Cristina Alesci discuss the impending Twitter IPO. They speak with Trish Regan and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Twitter's long-awaited ipo is expected to take off on november 6. we give the microblogging site -- it would give twitter a $10.9 billion valuation.

Twitter would be trading nine at halftime sales compared to nearly 13 for facebook, 13.4 for linkedin.

The exchange just announced that this saturday it will perform a twitter ipo test run, likely to ensure it does not follow in the footsteps of facebook phosphor's disastrous -- facebook's first disastrous day.

We have paul kedrosky, cristina alesci, and charlie were sell.

Great to have all of you here.

Paul, will this be different than facebook?

I hope so.

I could not do that a second time.

No one wants to do that again.

Insofar as you can learn lessons from the facebook ipo, everyone walked away with lessons that were relevant to them.

Don't blow out a bunch of stock from insiders.

These kinds of things are commonplace, but it's a good reminder.

I don't think that will be the problem.

Things to watch for on this particular ipo are likely to be a perceived underpricing.

You alluded to it off the top.

You end up with a lot of open market orders on the morning of the offer, and the stock can do all sorts of strange things that tend to break markets.

If this is where the price at the $17 to $19, it would be 9.5 times price to sales.

Why such a discount?

It's a conscious decision on management's part.

They want to price this in a way that it does not make people feel that they are trying to take every last dime that investors might want for a hot offering.

There is this democratic notion of not overpricing.

The market then decides you are underpriced.

The stock does some crazy 1999 style 14% move, and that can have its own unbalancing effect.

Cristina alesci, you are nodding.

What are you hearing from bankers as you talk to them?

If you price it too low, the stock will shoot up.

Institutional investors will get nervous, and then you have a lot of selling.

As i'm talking to some investors, they are saying $35 is the ceiling here.

No matter where the price is that night on the the next day he will trade up to $35 a share.

And then you are going to have issues.

Fundamentally, there will be a number of things that investors will be asking about.

If you look at the user base, 77% of monthly average users are overseas.

Only 28% of the ad revenue or revenue overall comes from those users.

Investors will be asking, that's an opportunity.

Why haven't you capitalized on it?

How much capital investment will it take to get a salesforce down there and get advertisers wherever in the world it is to go ahead and advertise on twitter.

The other big question will be, what can you do outside of advertising?

Is there an enterprise play?

How can you help companies distribute content?

You have this whole question about patents.

Twitter does not have that many patents at the end of the day.

This raises questions about talent taking technology with them when they leave the company.

There's a lot of pushback that investors can give here.

Maybe that will put sobriety on this offering.

When you are getting at is defining the mission of the company.

What is the mission of twitter?

Is it news, gossip, tv distribution?

There's a lot to it.

It is multifaceted.

Right now we are watching twitter slowly turn into an advertising company.

They could have ipo'd a little while ago.

They waited until they had an ad product that people wanted to use mtv networks were interested in -- used tv networks people were interested in.

You can click on it and go right to the program.

It is a direct line into every single user's living room.

They have done a good job with

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

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