Attention: Economic and Financial Reporters and Editors
COLLEGE PARK, Md. -- As Twitter goes public, IPO expert Gerard Hoberg, associate professor of finance in the University of Maryland’s Robert H. Smith School of Business, is available to expand on his comments (below) that address the company’s unique features and stock prospects.
He says Twitter’s large presence overseas could help sway investors:
“Twitter has some unique features that many retail tech IPO investors may find attractive. These investors often seek the possibility of a very big payoff even if it comes at the price of very high risk. An example is the fact that three quarters of Twitter's users are overseas, yet these users only account for about one quarter of Twitter's revenue.
“A key driver of abnormal successes in technology over the years is the existence of large captive audiences and a platform that is almost unlimited in its scale-ability. This large global presence, perhaps through chance events, may put Twitter in the right place at the right time, and we will see high long term returns if that transpires.
“However, how this will happen is not presently clear, and rival technologies may win out. These extreme differences in interpreting the future generate skew returns, and tech investors often find these differences attractive.”
Hoberg, recently a visiting financial economist with the Securities and Exchange Commission, focuses his research on corporate finance, security issuance, payout policy, industrial organization and empirical asset pricing. His recent work in IPOs examines the role of the underwriter and the role of prospectus disclosure in IPO pricing.