Twitter, the social media business that boasts 218 million monthly users, is floating on the stock market soon – reportedly shooting to raise $1 billion. Its managers will hope the initial public offering is a lot more successful than the share float of Facebook last May.

In the months immediately after Facebook’s IPO (taking its debut at a price of more than $38 per share), the social media firm’s stock slumped; the IPO was also hit by technical glitches on the Nasdaq exchange and the experience revived painful memories of some of the frothier dotcom activity in the 1990s. However, Facebook’s share price closed on Thursday, October 4 at $49.18 per share. So after all the angst, the journey has been well worth it for the long-term investor, it would seem.

And that, says UK private bank Kleinwort Benson, is the take-home point from analysis it has run on a crop of recent IPOs in the US, Europe and elsewhere. Don’t get sucked into deals by the pre-launch excitement and play a long-term game, is its message.

Gene Salerno, head of equities at the bank, says IPOs are “no sure thing”. He and his colleagues have crunched the numbers for IPO return data for the past 10 years. The bank says it can see how the capital-weighted aggregate of IPOs have performed for one year after the float. The average annual excess return (over S&P 500 Index of US stocks) for US IPOs has been 2.6 per cent per annum (year ending September 28), indicating out-performance. By contrast, the results are -3.5 per cent for European IPOs (against MSCI Europe inc UK Index) and a shocking -10.2 per cent for UK IPOs (vs All Share index of UK equities).

In the UK, if one drills down further, performance is as follows: 2003 +7 per cent out-performance against the All Share; 2004 +9.6 per cent; 2005 +4.4 per cent; 2006 -8.8 per cent (under-performance); 2007 -22 per cent; 2008 -21 per cent; 2009 -10.7 per cent; 2010 -4.6 per cent; and 2011 -30 per cent.

“Over those same ten year time-frames, only six of the 10 years saw out-performance from US IPOs versus four years where IPOs underperformed the S&P 500. The ratio has been worse in Europe, where six of the last 10 years of IPOs failed to outperform their market indices,” Salerno says.

“If the company is attractive, long term investors would often do better to buy in the aftermarket when the froth has blown off the shares, and when they can be sure they can buy the size of investment they want,” he concludes.

So when the Twitter IPO does take place, investors need to take the long view and not get too distracted by the inevitable media jamboree.