NEW YORK — As
As real estate listings website Zillow Inc. was going public two years ago, Nasdaq dispatched Chief Executive Robert Greifeld to personally make a pitch over breakfast in Seattle. The NYSE deployed Larry Leibowitz, its chief operating officer.
In the end, Nasdaq won. The exchange dangled generous use of its electronic billboard towering seven stories over
"If Twitter is smart — and I know they are — they are playing the exchanges off each other to Twitter's benefit," said Spencer Rascoff, Zillow's chief executive.
Twitter has picked a ticker symbol, TWTR, but so far hasn't signaled which exchange will get its listing when it goes public, probably before Thanksgiving.
The company and the exchanges have declined to comment on their negotiations. But a person familiar with the matter has said Twitter was leaning toward the NYSE but has made no decision.
For the exchanges, the stakes are high. Just as with Zillow, Greifeld visited Twitter's headquarters in San Francisco last week, according to the person, who was not authorized to speak publicly.
But complicating Greifeld's courtship of one of the most hotly anticipated IPOs in recent years is Nasdaq's fumbling of
It was a major blow for Nasdaq, long seen as a nimble, tech-savvy, all-electronic exchange. Glitches resulted in trading delays. Unfilled orders drew lawsuits and regulatory probes. Nasdaq wound up paying $10 million to the
"So many people saw it, so many people were hurt by it," said David Menlow, president of IPOfinancial.com, who speculated Twitter would choose the NYSE to avoid any problems. "It just became a nightmare. I couldn't even try to quantify the embarrassment."
Picking an exchange is just one the behind-the-scenes steps companies take on the road to becoming publicly traded. Professional and retail investors may care little where stocks wind up being listed, but the decisions nonetheless can bring fortune and prestige to Wall Street's giant exchanges during somewhat trying times for the industry.
For Nasdaq, Twitter could help lift a lingering cloud from the Facebook debacle.
"If Nasdaq wins Twitter, they're going to get a shot at redemption," said Patrick Healy, chief executive of Issuer Advisory Group, which consults with companies deciding where to list. "They both have a lot riding on this. For the NYSE, it's momentum. For Nasdaq, its reputation — they're the home of the tech stocks."
So far this year, Nasdaq has had the edge in tech IPOs. The exchange added 15 tech stocks in the first three quarters, compared with the NYSE's 14, according to data provided by Dealogic.
But its margin of victory has been shrinking. Although it bested the NYSE for tech listings in 2010 (28 to 20), the gap narrowed last year (20 to 18), according to Dealogic's tally.
To be sure, the Big Board has scored its own coups. Review site
The exchange even lured tech giant
For the exchanges, listings provide initial and annual fees. Although they may seem hefty, the fees — as much as about $100,000 at Nasdaq and as much as $500,000 at NYSE — barely register for companies with multibillion-dollar market caps. Exchanges also essentially collect tolls worth fractions of a penny whenever their listed stocks trade, and sell valuable pricing data.
The exchanges offer their competing systems and services to lure companies. The Nasdaq highlights its technological prowess, for example, while the NYSE spotlights its physical trading floor staffed with human market-markers.
There are also marketing opportunities. Each exchange offers the potential for splashy publicity on the opening day for a stock's public debut: Nasdaq has its Times Square location, while the NYSE offers opening-bell ceremonies under the glare of TV cameras.
Consider Zillow's case. By the end of negotiations, both exchanges had offered millions of dollars' worth of marketing support, Rascoff said. Nasdaq wound up more than doubling its original offer, though Rascoff declined to estimate its value.
"It comes down to the goodies," Rascoff said. "They're both good. They both pitch well. They've got similar products. The fees are similar. They both have high levels of service, and so it's a negotiation about the marketing support."
Zillow has since used Nasdaq's offices in Times Square for corporate events and media interviews. In August, the exchange used the billboard to promote the company's acquisition of competitor StreetEasy and Rascoff's interview with President Obama.
Still, the NYSE has its own allure.
RingCentral Inc., a San Mateo, Calif., tech firm, chose the storied exchange in large part because NYSE Euronext officials quickly built a strong relationship with the 14-year-old company, said Vlad Shmunis, its chairman and chief executive.
Both exchanges carry the listings of major companies, and both had compelling offers, Shmunis said. But part of the NYSE's draw was its symbolism: The institution traces its roots, after all, to 1792. A listing there is a sign an American company has arrived.
RingCentral, which specializes in cloud communications, rang the opening bell when its stock began trading Sept. 27.
"To have us listed on this venerable institution," Shmunis said, "there was a bit of a 'wow' in that."