Twitter’s shares rose high on Thursday’s debut at NYSE as the investors were keen on buying the shares hoping that this will be the next big Tech stock after Facebook and Google.
On Wednesday, Twitter announced the price of IPO at $26 per share and the next day share opened at $45.10 at NYSE with the ticker name TWTR, which climbed upto $50.09 and closed at $44.90. This 73% jump values Twitter more than $30 billion, which beats LinkedIn’s $26 billion market capitalization. However, World’s largest social network, Facebook’s current market capitalization is 4 times of Twitter. Both Facebook and LinkedIn’s shares are up around 80% so far in 2013, which suggests that the investors are in optimism about potential online advertisement grabbing capability of social networks.
However, many analysts are also worried about the downside risk too with the fair value target at $15. Pivotal Research analyst Brian Wieser suggested a SELL when the share price reached his target of $30 per share, but it never looked down in its first day trading.
Dick Costolo, CEO of Twitter told CNBC that the company will focus for big profit margins by making the service easier to use. He also said during an interview at NYSE:
“There is nothing structural about our business that prevents us from achieving the kinds of margins that are in our peer group.”
The main reason for the initial jump was the oversubscribed Twitter IPO, which made some investors to wait to buy until the trading started morning. Another reason could be the optimism in investors about the long-term opportunities not about the quick success. Compared to Facebook, Twitter is in infant phase regarding the advertisement revenue and business model but Twitter became the essential internet tool for businesses, consumers, media and advertisers similar to Facebook, Amazon and Google.
Point to note is, Twitter is already a major mobile platform and can earn huge revenue via mobile advertising. Do you remember, when Facebook IPO started to rise after the fall since its IPO? Yes, only after it began to focus on generating revenue from mobile ads and its shares completely recovered and even rose higher than ever.