Twitter may be the hottest initial public offering to come out of Silicon Valley since Facebook and Google, according to investors betting on Twitter’s market value through stockbrokers IG.
Chris Weston, chief market strategist for IG, says the firm’s clients are speculating that Twitter’s market value at the end of the first day of public trading of the stock will be US$15.5 billion, 55 per cent above the highest price it will fetch in its IPO. This is up from last Friday, when IG clients were betting Twitter’s market value was $13.15 billion.
IG clients, mostly individual investors, initially deposit 150 British pounds or $256 to buy one contract worth 10 pounds or $17. Investors make money if Twitter’s valuation in the IG market is above their bets and they lose money if the IG market value of Twitter is below their bet.
Investors can hold the contract until Twitter’s first day of trading or sell it before the IPO’s completion. Contracts are quoted in pounds and are traded 24 hours.
“It’s a good idea of how the market is valuing Twitter,” says Weston.
Has he placed a bet on Twitter?
He hasn’t because he can’t trade as an IG employee. Other London stockbrokers are doing the same as IG, says Weston.