Twitter frenzy: Twitter falls 7% after opening bonanza

Some analysts say the sizzling debut was a result of a shortage of Twitter stock.

NEW YORK: Twitter shares retreated on Friday a day after a thrilling debut on Wall Street, as some of the frenzy about the popular messaging service faded. The stock slipped 7.26% to close at $41.64- a day after a gain of 72.69% on its first day of trading on the New York Stock Exchange after a $1.8 billion initial public offering. Some analysts said the sizzling debut was a result of a shortage of Twitter stock and that most of the 70 million shares were reserved by underwriters. Brain Wieser at Pivotal Research, stated that the valuation seems too high a price to justify. Similarly Daniel Ernst at Hudson Square Research issued a “sell” recommendation, saying that Twitter is “more than fully valued” and priced at 600 times its projected earnings before depreciation and other charges. Twitter’s market capitalisaton, based on its stock price, fell back to around $ 22.6 billion after topping $ 24 billion.

Published in The Express Tribune, November 10^th, 2013.

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