Editor's Note: This content was originally published on
by Louis Bedigian.
In what can only be described as the biggest surprise announcement
of the week, Twitter
that it has confidentially submitted an S-1 to the Securities and
Exchange Commission for a planned IPO.
It did not take more than a few hours for this became the most
talked about story in technology. Not surprisingly, it is now a
), a private equity firm that owns a piece of Spotify, Dropbox, and
other tech startups, immediately rose after Twitter (its largest
holding) made the IPO announcement. The stock was up more than 10%
during pre-market hours and shot up 12% after the market opened. It
has since fluctuated back and forth between a 10% and 12% gain.
GSV experienced a similar spike when
) had its IPO.
Benzinga spoke to
co-founder Jea Yu just a few days before Twitter made its
IPO-related announcement. During the discussion, Yu praised the
social media company but said he would not buy it -- or any company
-- on an IPO unless he planned to trade the stock.
"It all boils down to how the market moves going into the IPO,"
said Yu, who created the
Morning Profit Maker
service on Marketfy. His new book,
Way of the Trade: Tactical Applications of
Underground Trading Methods for Traders and Investors
, is available now. "I know that sounds weird, but the market is
Yu estimated that GSV Capital would "skyrocket" the moment the
Twitter IPO was announced. "You want to get in before that," he
Yu recommended that investors look at other players in social media
-- such as
), and Facebook -- to get a sense of where the market may be headed
before Twitter's IPO.
Renren and LinkedIn are currently trading down less than 1%, while
Facebook is down roughly 1%.
When Twitter goes public, Yu expects the media to bombard the world
with one question: "Is Twitter gonna be the same as Facebook?"
Facebook is up more than 59% year-to-date, but it had a rough ride
in 2012. The stock lost roughly half of its value in the four
months following its May 2012 IPO.
Yu said that everyone is looking for a stock that can break that
template -- one that can pop and maintain its gains. If Twitter is
that stock, it could inspire more companies to go public.
"Ultimately, it's going to have to hold the levels pretty strong
for weeks," said Yu. "If that happens, it can completely change the
model. And if that happens, you're going to have more IPOs."
Facebook did a good job of erasing the previous template, Yu said.
But the torch is going to be passed to Twitter to see if it can
improve upon the template and break that mold.
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