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Initial public offerings inspire greed among beginning investors who hope to get in on the ground floor of a huge opportunity. The coming Twitter IPO has once again awakened avarice in the social-media world, especially now that long-suffering shareholders of Facebook (NASDAQ: FB ) have finally been vindicated after the stock's huge rebound recently.
But as the following slideshow describes, Twitter carries some huge risks -- 54 to be exact, according to the company's S-1 filing with the SEC. Just as many beginning investors who bought Facebook shares found out the hard way, IPOs don't always go the way companies intend, and early shareholders can end up with nasty surprises if they're not prepared for the potential fallout. By being aware of the risks, though, you can put yourself in the best position to make an informed choice about whether to buy Twitter shares after the company goes public.
Don't let Twitter's risks keep you out of stocks entirely
IPOs can definitely be risky, but even novice investors should still find ways to put money to work in the stock market. Otherwise, by remaining on the sidelines as millions of Americans have since the stock market meltdown five years ago, you could miss out on huge gains and put your financial future in jeopardy. But we've got easy ways for you to get started. By reading our brand-new special report, "Your Essential Guide to Start Investing Today," you'll get advice from The Motley Fool's personal finance experts on why you should invest and how to start investing today. Click here to get your copy right now -- it's absolutely free.
Tune in to Fool.com for Dan's regular columns on retirement, investing, and personal finance. You can follow him on Twitter @DanCaplinger.
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Report this Comment On October 07, 2013, at 7:03 PM, cmalek wrote:
Of the 54 items that supposedly illustrate Twitter risks, at least 44 are "could" or "might" items, meaning they are no more than guesses. Only 8 items are concrete statements, 1 is wrong and 1 is just plain silly.
Any or all of those 44 items may not occur as stated by the authors.
#28 is not a risk but an asset for Twitter to rely heavily on open source. Unlike closed, proprietary source, open source cannot be subverted with malware or adware without everybody noticing it.
#40 is just plain silly. Have earthquakes negatively affected the headquarters of any other California tech companies in the past?! Following the author's train of thought, we might also posit that a meteor will hit Wall Street, in which case not only Twitter stock will be affected but also 10,000 other stocks. Is a far-fetched earthquake or a meteor strike any reason to stop investing?
I'll not question the 8 concrete statements, although they are of dubious value.
Report this Comment On October 07, 2013, at 9:06 PM, TMFGalagan wrote:
@cmalek - To clarify, all 54 of these are taken directly from the actual S-1 that Twitter filed, reflecting the company's own assessment of its risks. Although I've paraphrased most of them, Twitter itself used hedging language in just about all of them. Moreover, it mentioned its open-source reliance as a risk and specifically cited earthquakes itself.
best,
dan (TMF Galagan)
Report this Comment On October 07, 2013, at 11:37 PM, lowmaple wrote:
earthquake; that's why Apple share won.t go up!
Report this Comment On October 09, 2013, at 12:31 AM, Realexpectations wrote:
Well....one thing is for sure!
We all know what we're getting ourselves into!
If ya don't, someone didn't read the FOOL!
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