Twitter leaves more than $1 billion on the table

November 7, 2013: 11:09 AM ET

Twitter made a ton of money from its IPO, but its bankers got the better deal.

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FORTUNE -- Twitter began trading this morning at $45.10 per share, after pricing its IPO last night at $26 per share. Or, put another way, Twitter (TWTR) left more than $1.3 billion on the table. Or, put even another way, more than twice what the company will generate in revenue this year.

To be sure, Twitter wasn't trying to grab every last dollar. They saw Facebook (FB) take that approach last year, and believed that it helped contribute to negative sentiment against the company (both among investors and potential employees). Plus, none of Twitter's employees or venture capitalists were selling -- unlike at Facebook, where more than half the shares came from insiders -- so there was no internal pricing pressure.

But I was a lonely voice arguing that Facebook priced its IPO properly, because IPOs are financing events. In short, I agreed with what Henry Blodget had written about LinkedIn in 2011, when it left just a couple hundred million dollars on the table. Moreover, Blodget's argument was based not on where LinkedIn stock opened, but where it rose to during the day. As I type these words, Twitter stock has now topped $50 (bumping my $1.3 figure up to nearly $1.7 billion -- amazing, given that the actual IPO only raised $1.82 billion).

The only people who should be thrilled about this are Twitter's bankers, who climbed over the Chinese wall to get a sweet deal for their high-net-worth clients.

Twitter itself obviously wanted a bit of price pop for PR and employee morale purposes, but here's something else employees could be thinking about today: Had Twitter priced at $45.10 per share and used the extra proceeds to give out holiday bonuses, it would have worked out to more than $580,000 per employee. How's your morale feel now?

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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