Commentary

Twitter Stock Soars in IPO

Any fears that Twitter might replicate Facebook’s “busted IPO” with a debacle on the first day of trading were dispelled today when the stock soared above its opening price. The stock debuted at $26 per share but immediately skyrocketed, nearly doubling to $50 per share before settling down to $44.90 at the time of writing. The closing price puts Twitter’s total value at around $25 billion, way up from previous estimates of $13 billion to $14 billion.

Predictably analysts are now saying that Twitter was too conservative in its pricing, even after raising the target range for the IPO from $17-$20 to $23-$25, then again to $26 earlier this week. Hindsight is 20/20, of course, and if the IPO had followed Facebook’s unfortunate example I imagine all these analysts would be saying the opposite: “They never should have raised the price at the last second -- you could tell they were just getting greedy!”

I’m sure the $1.8 billion Twitter managed to raise ($2.1 billion, if underwriters choose to exercise their overallotment option) will be sufficient to fund future growth strategies, whatever those may be. One laudable goal would be making the company, you know, profitable. As noted previously, Twitter posted a $134 million loss in the first three quarters of this year, up from an $80 million loss in full-year 2012. Hey, maybe the company will be profitable in 2014.  Or not! Why rush it?

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Anyway, whatever fate holds in store for Twitter, the company and its underwriters can heave a sigh of relief that the IPO went off without a technical glitch, which is a victory in itself nowadays.

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