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Twitter rides high on IPO in stark contrast to rival Facebook

Twitter ends the day trading at $45.52 a share after smooth sailing on Wall Street

November 7, 2013 04:53 PM ET

Computerworld - Twitter's first day of trading as a public company sits in sharp contrast to Facebook's troubled and disappointing IPO a year and a half ago.

As Facebook's opening day of trading was rocky and notable for its drop in stock price, Twitter's first day was unmarred as the company rode a steady wave of investor enthusiasm.

The New York Stock Exchange showed Twitter closing out the day at $45.52 per share, well above its initial offering price of $26 a share set on Wednesday night. The stocked opened at $45.10 a share.

Dan Olds, an analyst with The Gabriel Consulting Group, said he was surprised by Twitter's strength, given that the company has yet to make a profit and its IPO follows in the dark shadow cast by Facebook's limp IPO.

However, he added that investors obviously are looking past the risks and Twitter's "hazy" plans to make a profit, and instead are focusing on Twitter's potential. It doesn't hurt that the company has made "tweeting" a household word.

"I think it comes down to a couple of things," said Olds. "First, Twitter has been around a long time so there's some pent-up demand from folks who see the company as one of the last big-name private tech companies. Also, the Twitter guys did a good job avoiding the problems Facebook had with the trading mechanisms and their bankers did a great job of stoking demand."

People looking to invest in the idea and business of social networking have a fairly small group of companies to choose from - Facebook, Google, LinkedIn and now Twitter. The question now is whether investors can sustain this level of enthusiasm.

Patrick Moorhead, an analyst with Moor Insights & Strategy, is doubtful the stock will continue trading so high, but Brian Blau, an analyst with Gartner Inc., is more optimistic.

"Investors will keep interested as long as Twitter makes progress on its key issues, which are user stickiness and retention, expansion of their business lines, and continued growth in ad revenues," said Blau. "This is a good day for social networks, in general. The success of the Twitter IPO really means investors believe the future has social networks integrated into our digital lives. While that may seem obvious, I think investors then have further confidence in Twitter to succeed as a business."

covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at Twitter @sgaudin, on or subscribe to Sharon's RSS feed Gaudin RSS. Her email address is sgaudin@computerworld.com.

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