IPO Talk: Twitter Takes Center Stage

Did you just step aside from your Twitter account to check out this article about the Twitter IPO? If you did, your tweets have been contributing to the hype of this latest social media IPO. Yes, your latest 140 characters have made Twitter that much more popular. Whether you tweet about stocks or tweet about your latest meal, the Twitter IPO is sure to garner your attention.

Twitter recently announced that they were going public not from an official press release, but from a 140 character or less tweet.

We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.

— Twitter (@twitter) September 12, 2013

Yes, Twitter officially announced going public via the platform that has over 218.3 million active users, according to TechCrunch.com.

Early indications suggest that the company is planning to sell shares around $17 to $20, which would put the amount raised at around $1.6 million if they sell about 80 million shares. Wall Street analyst have stated that Twitter will have around 545 million shares outstanding, thus a $20 estimate would value the company at $10.9 billion. According to PrivCo, Twitter is expected to make $500 million in revenue up from 2012 when Twitter saw revenue of $245 million. Going into the IPO this actually seems quite reasonable since Facebook looks about 20x price to sales.

So is Twitter the next hyped IPO? Possibly. It is really up to the business model that Twitter defines in their SEC filings. Are they capable of growth and gaining revenue via advertisements and paid sponsorship of Twitter tweets? The initial future looks relatively bright, but what's troublesome is their technology. For the most part, this technology can be replicated since Twitter does not have a patent to protect their 140 character tweets. The barriers to entry are minimal and companies that want to replicate the success and utilize the Twitter technology can do so. Thus, it will be interesting to see what the company releases in their IPO filings regarding the future of the company.

So what can you expect from Twitter's IPO? A lot of hype!

Therefore, Day 1 will likely be up, as anything below the IPO price will initiate lawsuits, so traders can potentially make gains on Twitter's IPO just like many did on Day 1 of Facebook's IPO.

As far as Twitter's future, I would expect to see the company maintain significant growth over the next few years.

In related news, it looks like the NYSE is preparing for the Twitter IPO. It would be nice to avoid the start of Facebook's IPO, which was delayed nearly 30 minutes.

MVP OTC Stock Contest - Week #42 - SEEK Winning Alert

Congratulations to Hammer1 for winning the 2013 MVP OTC Contest #42!

SEEK was alerted by Hammer1 at $0.0015 and reached a week high today of $0.0044 for an MVP contest gain of 193.33%!

In second place, TDEY alerted by Big Tuna at $0.0085 and reached a week high of $0.0019 for an MVP contest gain of 123.53%.

Rounding out the top 3 was FNMA alerted by Chartman17 at $1.555 and reached a week high of $2.68 for an MVP contest gain of 72.35%.

MVP Big Board Stock Contest - Week #22 - USU Winning Alert

Congratulations to Big Tuna for winning the 2013 MVP Big Board Contest #22!

USU was alerted by Big Tuna at $9.13 and reached a week high today of $11.20 for an MVP contest gain of 22.67%!

In second place, GWPH alerted by MattySimone at $27.95 and reached a week high of $32.7499 for an MVP contest gain of 17.17%.

Rounding out the top 3 was ABT alerted by RobInvest at $33.50 and reached a week high of $37.62 for an MVP contest gain of 12.30%.

FMCC & FNMA Volume Alerts

Both the weekly and the daily charts on FMCC & FNMA have been setting up for a bullish run. This morning may be the start.

Only 30 minutes into the trading day both stocks are experience an increased volume of shares.  FMCC is over 6M and FNMA is nearing 12M.  Both stocks are trading up this morning.

With the release of their quarterly results upcoming, these next few months look to be an important determinant in the direction the companies will be taking.  There has been a new company already registered that is being rumored to be the company that merges FMCC & FNMA, however, it will be up to the terms established in upcoming legislative bills that will determine whether or not this actually happens.

The last 5 minutes of trading:
FMCC traded 1M shares and is up to 11% early Wednesday
FNMA traded nearly 2M shares and is up 10% early Wednesday

Investors Hangout MVP's - Contest Rules

We thought it would be fun to upload a short video highlighting the rules of our Weekly MVP OTC Contest and Bi-Weekly MVP Big Board Contest. This video just shows the very basics to get you started in submitted an eligible pick. Additional contest rules can be found on our MVP website by visiting this link:
OTC Contest
Big Board Contest

Submit your Quality OTC Stock picks in our weekly MVP OTC Contest and submit your Quality Big Board Stock picks in our Bi-Weekly MVP Big Board Contest. Contest submission periods start after the closing bell Friday and end Sunday 11:59PM ET. We welcome all entries into our contest. Stop by Investors Hangout where you can discuss the contest stocks and submit your weekly pick. http://investorshangoutmvp.com

Also, check out our website for Daily Contest Quotes, Updated Rankings, Stock Charts, DD, Stock Market Analysis and more!
http:// ihmvp.blogspot.com

Barriers to Small Business Growth

The CEO of the OTC Markets Mr. Coulson, addresses the House subcommittee on capital formation in June 2013.  In his talking points he mentions several barriers to small business growth.  The main point he discusses is the tax rates for small businesses and how their higher tax rates compared to larger corporate firms puts them at a capital disadvantage.  In addition, he mentions that there should be additional transparency when it comes to who is behind trades. 

Toxic Financing Deals: The Love of Short-Sellers

You may have come across an OTC stock over your years of trading and investing that had one of the worst combination for any OTC investor and the company for that matter.  At some point the company decided to take on debt to finance operations, which included the rights of the debtor to call the debt due and have shares issued to cover the debt.  This convertible debt is commonly referred to as toxic financing.


From an investors perspective it is relatively obvious how damaging this type of toxic financing can be to your investment.  Once the debt is converted into shares of common stock, the sale in the public markets inevitably dilutes the percentage ownership of your shares in that company.  The additional shares in the market, if not acquired by interested buyers, can depress the stock price.  This form of dilution is music to the ears of short sellers who can have a tremendous impact on the stock price during the dilution.

Here is a basic scenario of what happens during periods of dilution, and the ultimate reason for a stock pps decline:

• Dilutive MM shows up on the ask (e.g. BMAK or VFIN/VERT)
• MM's such as VFIN & VERT work in tandem to maximize the pps realized for the group or individual selling the stock.
• One shows on the bid to symbolize strength, while the other will show 10k on the ask so that those buying will buy at the ask instead of parking on the bid
• It might take a day or two for the market to realize that dilution is in fact taking place
• The chatter on stock message boards quickly changes
• New aliases show up touting the ill effects of this dilution, calling the company a scam, POS, and more
• This causes emotional investors to react irrationally selling into the bid
• Short-selling commences and often-times involves them jumping over the dilutive MM to sell shares to the interested buyers
• Then the walls on the ask show up to push the price lower to be able to cover
• If the dilutive MM is not finishing selling their shares, this cycle continues and the short-sellers can continue to depress the stock price

Ultimately, short-selling in illiquid markets has the potential to ruin a company.  Once the stock price is depressed, interested buyers may be wary of the company and sit on the sidelines.  The company may need to raise capital by selling additional shares of equity, but either have to sell at extremely low levels, which means the amount of shares they have to sell is multiplied or they simply cannot find buyers at all.


The solution to this problem needs to be addressed by the markets them self.  Institutional investors, banks, and large retail investors do not like the risk involved with these types of companies.  Thus, these companies have limited resources when it comes to raising financing.  A desperate CEO will likely end up taking a toxic deal in the hopes that they can pay the debt prior to it maturing.  When they can't, the market value of that company takes a huge hit.

Making additional financing options available to these small and micro-cap companies will help to address some of these market-related issues.  Companies will take on less toxic financing and hopefully have better opportunities to grow their business.