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
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.
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."
Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed . Her email address is email@example.com.
- Twitter brings the data back in-house with Gnip buy
- Twitter crashed -- again -- on Tuesday
- Twitter's slipping user growth spooks investors
- Get ready to tweet your questions for Twitter's first earnings call
- Super Bowl sets Twitter record, as Volkswagen launches social war room
- Perspective: Twitter's success opens up IPO pipeline
- Update: Twitter goes public at $45 a share
- With IPO cash influx, Twitter could be bigger threat to Facebook
- Ahead of IPO, Twitter shines up multimedia image
- Twitter kicks off pre-IPO investor roadshow
Read more about Social Media in Computerworld's Social Media Topic Center.
- Path Selection Infographic Path Selection Infographic
- Hyperconvergence Infographic A wide range of observers agree that data centers are now entering an era of "hyperconvergence" that will raise network traffic levels faster...
- Preparing Your Infrastructure for the Hyperconvergence Era From cloud computing and virtualization to mobility and unified communications, an array of innovative technologies is transforming today's data centers.
- How WAN Optimization Helps Enterprises Reduce Costs If you wanted to break down innovation into a tidy equation, it might go something like this: Technology + Connectivity = Productivity. Productivity...
- Cloud Knowledge Vault Learn how your organization can benefit from the scalability, flexibility, and performance that the cloud offers through the short videos and other resources...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users? All Social Media White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!