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Twitter Pops on IPO

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Twitter Pops on IPO

On Thursday morning, shares of the newly public Twitter (NYSE:TWTR) were sent racing to the upside despite broad market weakness. After the tough initial public offering from competitor Facebook (NASDAQ:FB) just a couple years ago, all eyes were on the Big Board this morning. The company elected to go with the New York Stock Exchange versus the Nasdaq, the conventional home of technology favorites.

The Nasdaq’s botched handling of the Facebook IPO may have convinced the company the NYSE offered the easiest transition to the public market. The stock was met with exorbitant demand that pushed its opening price to $45.10 at the very start of trading, a 73 percent surge above its pricing Wednesday night at $26. Twitter’s hot debut put its market capitalisation above $32 billion, larger than 337 companies in the S&P 500 in retrospect. Demand for the deal was as high as 30 times the allocation. As a result shares of the company were sent soaring to $50 per share following the start of the session. Nearly 100 percent gains were registered for some investors whom were lucky enough to get in on the deal. Only the wealthiest and top priority clients of the investment banks got access to shares at $26 per share.

Time will tell if the company can sustain its lofty valuations. The internet plays of today must prove to the street and their investor base that they can successfully monetize their users. The company is registering large losses, making some analysts wonder about its ability to generate profits in a weak economy. Meanwhile, the company has been criticised for hosting large numbers of faux users that join the social network. At the time of this writing, shares of the company were higher by 75 percent to $45.60 per share.

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