Twitter Shares Rise 73% in First Trades on NYSE


There's no doubt that Twitter is trending. The microblogging service launched its initial public offering Thursday with great fanfare.

Mark Lennihan/AP
But not many individual investors were able to scoop up shares of the seven-year-old company at the IPO price. That's because the big boys -- institutional investors such as mutual funds and hedge funds -- grabbed those.

So the question is -- in 140 characters or less -- should you buy in now that it's trading like any other issue?

There's no easy answer, but we'll run through some of the pros and cons.

First, Twitter (TWTR) is off to a fast start. The initial offering of 70 million shares was priced at $26 dollars, and the first trade was at $45.10 a share. That's a 73 percent jump. Trading, no doubt, will be very volatile for at least the next few days.

Proponents like it because Twitter has become part of the vernacular, especially for people age 18-to-34 -- those most targeted by advertisers.

They live in the Twitterverse, sending out messages of up to 140 characters. Some are as mundane as what you had for lunch today. Others are earthshaking such as when Twitter played a key role in the Arab Spring revolution.

You can post your messages, and you follow other people who post. Entertainers Katy Perry, Justin Bieber and Lady Gaga all have more than 40 million followers.
President Obama has nearly that many.

The company has 232 million users worldwide, and its user base is still growing rapidly, up 39 percent from a year ago.

The IPO price was raised several times in the weeks leading up the Thursday debut here, but still came in at what analysts consider a reasonable level, at least in comparison Facebook (FB) and other social networking companies.

Now for some of the cons.

The biggest negative is that Twitter has never made any money; never turned a profit. And it doesn't expect to earn a profit until 2015 at the earliest.

Twitter is often compared to Facebook, but remember, Facebook was growing at a faster pace when it was the same size as Twitter is now. So it's public offering comes at an earlier stage of development.

Analysts say the company's effort to monetize its huge fan base is still at an early stage. It hasn't proven that advertisers can successfully appeal to its audience, and that users won't be turned off be turned off by too many adds.

And Twitter's pace of growth has slowed for seven consecutive quarters.

There are still plenty of skeptics who say Twitter could be a flash in the pan. They say there's no guarantee it will even survive.

The bottom line is, many advisers say there is no urgency to get into the stock right now. It's likely to be volatile of the coming days and weeks. So you might want to take a little bit of time to judge the company and its stock market value, before taking a leap of faith.

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Emily Simpson

There isn't any point in putting money into a company that doesn't make any money. I'd put m efforts behind Google, Facebook, and Youtube (the top 2 sites). There is a good Google ebook that you can get for free here: at least that has some value to it.

November 30 2013 at 3:40 PM Report abuse rate up rate down Reply

I think its true that twitter has never made any money; never turned a profit and it doesn't expect to earn a profit until 2015 at the earliest. So they should add new features that can attract a visitor lot and they can earn profit like facebook.

November 08 2013 at 1:46 AM Report abuse +1 rate up rate down Reply
Tom Huskey

I will meet all you Hedge Fund Guys in the Hamptons soon as I get my sale comfirmation

November 07 2013 at 1:43 PM Report abuse rate up rate down Reply
O Great Master

Twitter your money away investing in something that actually makes no money, and could go the way of the Dodo bird any day now... when the next big thing comes in to wipe it away with users.

November 07 2013 at 12:35 PM Report abuse rate up rate down Reply