Twitter IPO: Follow The Trend, Give It Time

Recently, Faiyaz Moosa wrote a blog in regards to the  latest downgrading of Twitter after its IPO. Moosa’s predictions about the future of Twitter focus entirely on its unproven results, arguing that Twitter’s long-term prospects are ideal if it can sufficiently monetize its practices. The article he cites, on the other hand, argues that Twitter’s quarterlies and earnings reports will be a burden to its price, as investors will negatively respond. Twitter’s IPO leaves a couple valuable lessons about investing. The first is that sometimes buying into a trend is worth more than the actual investment itself. As Twitter’s securities have shot up to a price of $45, it’s obvious that investors like the speculative nature of tech and social media IPOs, as similar positive results have come from the IPOs of its counterparts. Secondly, financial reports aren’t always an instantaneous reflection of how a share price will respond. As Twitter is a growth stock, there is a naturally speculative nature about its future, so investors will give it time to establish a working business model. After Tesla has released two under-performing financial releases this year, its share price only dropped because a Model S had a battery fire. One thing’s for sure, which is arguably the one thing that matters: Twitter has access to a colossally large number of users on its service, which gives it stunning versatility in how it attempts to monetize.