Marketplace Whiteboard®

Twitter IPO rumors: NYSE not Nasdaq

Paddy Hirsch Sep 24, 2013

Twitter listing on the NYSE looks a bit like a hip-hop dancer going to a hoedown!

Well, not really.

Nasdaq has done a great job of positioning itself as the place for tech companies to list (“list” is Wall Street jargon for selling your shares to the public for the first time – otherwise known as an IPO). And when you look at the list of top tech companies in the Nasdaq stable, the up-and-coming tech firm can’t help but marvel: Google, Apple, Facebook, Microsoft, Amazon, Yahoo, eBay … I could go on.

But the fact is, you don’t have to be a tech company to list on Nasdaq, and if you happen to be a tech company, the Nasdaq isn’t the only place you can list. Pandora chose the NYSE in 2011. As did LinkedIn, the same year.

So why are there so many tech companies on Nasdaq? Mainly because Nasdaq itself is a tech company. It was launched in 1971, and unlike the NYSE, which used humans to make trades (imagine that!), Nasdaq was entirely computerized. So if you were an up-and-coming tech company with a passionate belief in the power of computing, you had a lot more in common with the techy folks at the Nasdaq than the dinosaurs over at the NYSE.

It didn’t take long for the NYSE to see the light and get rid of those unreliable humans, of course.

Today the NYSE is every bit as teched-up as the Nasdaq. But the bias persists, both in the minds of the public and of CEOs looking for a home for their listing.

It’s a bit like kids playing on the playground: Girls over here and boys over there. So if you’re a tech company, the Nasdaq is the place to be. Except that an independent-minded child might not want to be pigeon-holed like that, and there may be a good reason that some boys might want to play with the girls (maybe he wants to play double dutch).

Twitter is just like that independent child, making its own decision about where to list, rather than being pressured by convention. It’s undeniably a tech company, but we can’t know at thins point what’s driving its decision when it comers to choosing an exchange; there could be any number of arguments made in the Twitter conference room in favor of NYSE:

  • Pique: “Screw the rest of the tech community, we’re doing something different!”
  • Snoot: “We don’t wanna be anywhere near those Facebook louts; let’s go play in this corner!”
  • Financial: “We’re getting a better deal with the NYSE.” (The NYSE and Nasdaq have different pricing structures, and it could have been just plain cheaper to list on the NYSE).
  • Relationship: “The folks at NYSE are just nicer – remember that trip we all made to Tahoe?” (Sometimes the exchanges approach companies years before they list, hoping to build a relationship that will secure business down the line.)
  • Brand: “Listing with the NYSE just sounds awesome. It’s like, your Doc Martens are cool, but my Louboutins are just, like, better!”

Listing on a certain exchange used to be a big deal because it guaranteed a certain market. The bigger the exchange, the more buyers and sellers meant more liquidity, and better pricing, which in turn meant more buyers.

But today the listing means a lot less, because after the initial sale of shares to the public, those shares can be traded on any exchange. So after its IPO, Twitter’s shares will be available on a whole bunch of exchanges, including Nasdaq, regardless of where it lists.

Which means that the announcement of where Twitter will be listed is really all about getting people talking.

Which, of course, is what Twitter is all about.

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