Information Disseminated with Technology Firms on Social Media
Abstract
Technology startups going public to build a sustainable company that is public, as we see hot technology initial public offerings (IPOs) – Twitter, Alibaba, and the like-went to public in past years. We examine the IT-Producing IPOs versus IT-Consuming IPOs on their first-day returns and long-run underperformance. We investigate the social media content on IT-Producing IPOs versus that on IT-Consuming IPOs and find that IT-Producing IPOs are actively using Twitter to inform consumers while IT-Consuming IPOs are tweeting to getting feedbacks and inputs from consumers. In addition, ITProducing IPOs dominate over IT-Consuming IPOs in terms of the attention attracted from social media users as measured by the volume of the social media content posted on them.
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Introduction
Through years, we see technologies have changed the way we think, work, and connect with other people. Innovative technologies have provided solutions to people and played a huge role in our society. In the past years, new technologies bring people together through social media platforms and get connected with each other; new technologies provide platforms form people purchase and sell products beyond geographical and cultural boundaries; technologies make it possible for people to access to market information or news in seconds. Technology advances are making a real difference in every sector of our life.
Technology startups are going public to build a sustainable company that is public. Going public is the ultimate for most start-ups and it is the primary way for startup investors to cash out. In the past few years, technology firms such as Facebook, Twitter, and Alibaba went to public and made a big hit on their IPO day. Twitter closed its first trade day with the price 73% higher than the offer price. It raised 1.82 billion dollars in its initial public offering (IPO). Yelp! Soared 64% above its offer price on the first day. Technology IPOs are scarce, but they catch a lot of investors‟ attention. More than half of the tech firms that have gone public lately have posted double-digit stock gains. As noted in Dow Jones Venture Source, there are more than 130 technology startups valued at $1 billion and worth above $480 collectively. Technology companies that focus on new trends such as cloud computing, social network, network security, e-commence, data analytics have completed their IPOs successfully and their IPO attract the most investor interest and attention.
New technologies have brought people together through social media platform. When popular technology firms went to public, they cause a big buzz on social media. People tweet the IPOs and exchanged their opinions on the stock valuations. The chatters on Twitter share either positive or negative comments in the tweets. The IPOs catch more investor interest and attention. In this study, we investigate the technology IPOs and compare them with non-tech IPOs in terms of their first-day returns and long-run performance. We also examine the social media content about the technology IPOs. We study the topics embedded in the social media content mentioning IPOs.
Conclusion
We compare IT-Producing IPOs and IT-Consuming IPOs in terms of their first-day returns and long-run underperformance in social media context. We find that IT-Producing IPOs have significantly higher returns on average than IT-Consuming IPOs, and higher long-run accumulative returns as well. The IT-Producing IPO firms dominate over IT-Consuming IPOs in terms of the number of their tweets posted by Twitter users and the number of business tweets tweeted by themselves. We also conduct a topic analysis on the tweets over the IPO firms, and find the IT-Producing firms are tweeting to inform consumers while IT-Consuming firms are tweeting to request feedbacks, inputs, or interactions from consumers. In addition, we find that IT-producing IPOs attract investors attention and technology IPOs is one the main topics in the tweets posted by Twitter users.