The short messaging service Twitter is slated to put itself up for an initial public offering to investors this week. The move, according to media reports, is being met with very mixed reactions.
An Associated Press-CNBC poll that came out today shows that 31 percent of respondents think buying into the company would be a good idea. Forty-seven percent say they'd just as soon shy away from the opportunity. And of those specifically in the 18-to-34 age range, which some might consider Twitter's sweet spot for investors, more than half say it's a bad bet.
That compares with similar poll done when Facebook went public last May in which 51 percent of those polled were psyched and 31 percent were cautious.
But in addition to the negative perception among potential public stock buyers, there are a couple of investment companies who feel they were mistreated by Twitter ahead of the IPO in the context of an apparent private stock sale, and they're suing Twitter for $124 million.
Reuters reports that the thrust of their complaint is that they were enlisted by Twitter to line up possible private investors to fuel interest in the company ahead of the IPO, and that Twitter then pulled the plug on the deals. The two firms say they did all that work, received no compensation and that Twitter never intended to complete the deal.
Twitter says no such agreement ever existed and that the suit is without merit.
Meanwhile, one of the plaintiffs in the suit against Twitter has been suspended from securities practices by the Financial Industry Regulatory Authority. FINRA says the principal of the Arizona-based Precedo Capital Group either ignored an order to settle an arbitrated dispute in another case or didn't keep FINRA informed as to how it would comply with the order.
In the face of all the attention, it would seem wise for any investors considering Twitter to use caution to avoid the potential of investment losses.
Source: San Francisco Business Times, "Plaintiff in Twitter suit's broker license suspended by FINRA," Patrick Hoge, Oct. 31, 2013