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NYSE tests systems ahead of Twitter IPO

Warwick Ashford

The New York Stock Exchange (NYSE) says a weekend test run of Twitter's initial public offering was successful.

The NYSE conducted its first trial IPO to avoid problems that beset Facebook’s IPO in May 2012, with Twitter to be the biggest tech company to go public since Facebook.

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On the first day of trading in Facebook’s shares, the Nasdaq was overwhelmed because of glitches in the system, which meant traders had to wait hours and even days to get confirmation of their trades.

The US Security and Exchange Commission subsequently fined the Nasdaq $10m for the failures.

Keen to avoid similar problems, NYSE traders simulated buying and selling shares on the exchange on Saturday, to identify any potential technical hitches before Twitter begins selling shares in November.

In a statement, the NYSE said: "We're being very methodical in our planning for Twitter's IPO, and are working with the industry to ensure a world-class experience for Twitter, retail investors and all market participants."

Twitter has set a range of $17 to $20 for shares in its IPO, valuing the microblogging firm at $11bn.

After years of speculation, Twitter finally announced it had applied for an IPO in September.

The sale of 70 million shares, around 13% of the company, appears to be set for 6 November and is expected to raise between $1.4bn and $1.6bn.

Like the NYSE, Twitter is also keen to learn from the mistakes made with Facebook’s IPO.

Analysts said the valuation, which was less than forecasted, indicated the firm wanted to avoid the dip in prices that followed Facebook's IPO.

Facebook's shares were priced initially at $38. After rising to $45, they subsequently fell $19.82 before climbing back to floatation levels in August to trade above the listing price by October.

Twitter has seen a steady growth since its launch seven years ago, but has yet to show a profit and establish a solid business model.

The microblogging service has 218 million monthly users, but the firm made a loss of $69m in the first six months of 2013 despite revenues of $254m, mostly from advertising.

Analysts said the lower-than-expected pricing may help Twitter’s share prices initially, but investors will need to see profits in the longer term.

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