On November 8, 2013, Twitter debuted on the NYSE and shot up to a closing price of $44.90 for the day. Now for the good part: the IPO was priced at $26 per share. Do the math and you will find that anyone who invested in the IPO experienced a lofty 73% rise in value of their shares. Yet, with any exorbitant growth in such a short period, questions and concerns over whether Twitter is overvalued exist.
Even though Twitter’s stock price is similar to Facebook’s, its net worth is nowhere close to Facebook’s, due to its lesser amount of shares outstanding. With that being said, its IPO was much more successful than Facebook. In the article, Matt Nesto of Yahoo Finance primarily discusses how the IPO’s launch in a more suitable environment were critical to the company’s public debut. These factors included the stock market sailing along with year highs and how debuting on the NYSE benefited Twitter. Even with this, I am skeptical that Twitter is worth its current valuation. To me, the price is currently propped up by investor confidence. The company has already mentioned that even though revenues have been increasing, it is not profiting. If I were to invest in a company, I would be concerned with this statement as I expect a company to profit when it can utilize millions of users as ad revenue and as a source of trends.
Original article: Yahoo Finance
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[1] Yahoo Finance
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