Oct. 15 (Bloomberg) -- Twitter Inc. choose to list its shares on the New York Stock Exchange, highlighting the Big Board’s improving allure among the biggest Internet companies.
The NYSE Euronext market won the listing about 17 months after Facebook Inc. started trading on Nasdaq OMX Group Inc.’s rival platform, a debut marred by a software malfunction that delayed trading. After lagging behind Nasdaq for years in the battle for technology IPOs, NYSE is gaining ground.
Twitter joins Pandora Media Inc., LinkedIn Corp. and Yelp Inc. as Internet companies that chose the NYSE since 2011. Along with Facebook, Nasdaq won Groupon Inc. Listing fees accounted for about a fifth of revenue for both NYSE and Nasdaq last year, making the competition for initial public offerings about more than just bragging rights.
“Nasdaq won Facebook, NYSE won LinkedIn, and Groupon went to Nasdaq,” Adam Sussman, director of research at Tabb Group LLC, said in a phone interview. “In terms of social-media company listings, we’re in the third inning. And with Twitter going to NYSE, I think we can say it’s a tie.”
Choosing NYSE rather than Nasdaq highlights the different paths that Twitter, a microblogging website whose users communicate in 140-character posts known as tweets, and Facebook have taken to go public. Facebook chose Morgan Stanley for its listing, while Twitter picked Goldman Sachs Group Inc. as the lead underwriter and kept a low profile during the process by keeping its IPO documents private until now.
The Twitter offering will probably be one of the year’s largest. Twitter is valued at between $10.5 billion and $18 billion, Bloomberg News has reported. The 25 technology and Internet IPOs through Sept. 24 h ad raised about $3.84 billion, according to data from Dealogic.
The competition between NYSE and Nasdaq in this area has become increasingly fierce.
From 2001 through 2010, Nasdaq won 261 technology and Internet IPOs and NYSE scored about a third as many. Since the start of 2011 through Sept. 24, NYSE won 50 such listings that raised $9.38 billion, according to Dealogic, while Nasdaq secured 55 and raised $25.63 billion. That figure includes the $16 billion raised by Facebook.
Oracle Corp., the software maker with a market valuation of more than $150 billion, moved its listing to NYSE from Nasdaq in July, the biggest company to ever switch from one exchange to the other.
Twitter said in a Sept. 12 tweet that it had confidentially filed for an IPO with the U.S. Securities and Exchange Commission. Twitter filed confidentially under the Jumpstart Our Business Startups, or JOBS, Act, allowing the company to keep its financial data under wraps until three weeks before marketing the offering to investors.
The news set off the competition for the right to host its market debut. Bloomberg News reported on Sept. 24 that Twitter was leaning toward NYSE, according to a person familiar with the matter.
Twitter’s decision on where to list may influence technology companies in the future, said Richard Kline, a Menlo Park, California-based partner at the Goodwin Procter law firm.
“Companies like to list where other, similar companies are listed,” Kline said in a phone interview. “I also think that anybody associated with the offering will get an uplift from it, and next time they meet with a company’s board they can say ’we won Twitter.’”
Facebook’s decision to list on Nasdaq was considered a win for that exchange, with Nasdaq’s stock rising 1.2 percent the day after the news was made public. The start of trading on May 18, 2012, went wrong when a software bug caused its delay and prevented some orders from going through. Nasdaq paid $10 million to settle regulatory charges that the error violated securities laws.
While there are 13 exchanges among the 50-some venues that trade stocks in the U.S., NYSE and Nasdaq are currently the only two that list companies.
Listing fees and related services made up about a fifth of 2012 net revenue for both exchanges. At NYSE, that amounted to $448 million of its $2.32 billion in revenue. For Nasdaq, fee- related sales contributed $375 million of the company’s $1.66 billion in net revenue.
As the primary market for a company’s stock listing, an exchange is responsible for providing the rest of the market data such as bids and offers and the price at which shares change hands. It was Nasdaq’s quote dissemination service, known as the SIP, that crashed on Aug. 22, causing the halt in its listed stocks that lasted more than three hours.
Primary exchanges often also perform investor relations roles for their listed companies.
The company’s home exchange is also a factor in closing auctions as mutual funds and other money managers typically require the closing price on the listing exchange as the stock’s price of record. Volume on both NYSE and Nasdaq jumps in the final minutes of each trading session as millions of buy and sell orders are routed their way.
Sussman said that during the regular course of trading, where a company lists is of less importance thanks to the market fragmentation of the past decade that’s seen the U.S. stock market grow to more than 50 venues across the country. Over the past 20 days, half of all trades in Facebook shares have taken place off-exchange, according to data compiled by Bloomberg. The share of the stock’s trades on the Nasdaq Stock Market was about 22 percent.
“Regardless of which exchange Twitter decided to list on, it’s likely a good portion of the secondary trading won’t occur at that exchange,” he said. “While it’s a win, and a highly publicized win, it means less today than it did 10 years ago.”
--Editors: Michael P. Regan, Pui-Wing Tam