Twitter releases IPO
November 6, 2013
Twitter released their initial public offering (IPO) at a cost of $26 per share on Nov. 7. Facebook’s IPO last year, which astonished Wall Street by making its goal of selling 421 million shares, set the precedent for social media offerings. Twitter took a more modest approach by only aiming for 70 million shares, which it sold handily.
While both websites made their initial goals, that is where the similarities seem to end. Whenever a company first enters the stock market there is always what is referred to as a first day price pop, or a steep increase in share value on the first day as hype surrounds the event. Twitter experienced healthy first day pop, while Facebook fell flat on its, well, face.
According to Forbes, Twitter opened and closed at nearly double its IPO and peaked at over $50 a share. Contrarily, according to the New York Times, Facebook had an embarrassing first day on the market closing at a meager $0.23, resulting in one of the most publicized disappointments on Wall Street.
Where the two websites appear similar, however, is the performance of their stocks over the days following the IPO.
As of the writing of this story, Twitter’s stock had gone down by more than 7 percent after which it bounced back slightly and appears to have leveled off. Last year Facebook followed a slow path of depreciation after its stock lost value for nine of the first thirteen days.
Regardless, Twitter will likely do well in the stock market as it is still a very trendy website as opposed to where Facebook was last year, something that had arguably already experienced its heyday.
Now that Twitter is a publicly traded company, it is likely to increase advertisements on the home screen in order to satisfy major investors. The key to maintaining its status as ‘trendy’ is to avoid the clutter of too much advertising that many feel Facebook fell victim to.
According to The Guardian, 80 percent of Twitter users are mobile and will soon be faced with mobile advertisements. How and how much advertising will be present is a critical but yet unclear factor.
Eventually it is likely that Twitter will change for the worst in ways that Facebook and Youtube has and its value will be forced down. Until then and as long as this can be avoided, Twitter’s popularity will be reflected in it’s stock market value.