Latest News: Technology |  Celebrity |  Movies |  Apple |  Cars |  Business |  Sports |  TV Shows |  Geek


Filed under: News


Twitter Traded Every IPO Share On Thursday And Crossed $50 Billion In Value

Twitter Traded Every IPO Share On Thursday And Crossed $50 Billion In Value
Photo Credit: Forbes

Twitter was down $9.56 or 13% to $63.75 on Friday after being up $3.35 to $73.31 on Thursday to reach an all-time high. The shares are up 167% from its IPO offer price of $26, up 54% from its first day close of $44.90 and up 67% for the month of December.

The stock is being driven by momentum investors

There are 80.5 million shares available for trading from the company’s IPO and on an average day, per Yahoo Finance!, there are just over 20 million traded. On Thursday there were 82.7 million shares traded, on Friday there were over 60 million and over the previous twelve days there were at least 13 million shares traded. With what appears to be much more demand than available stock this has led to the stocks rise and volatility.


Short interest has increased by almost 400%

As of the latest date short interest was available (Dec. 13) title="Twitter short interest">there were 23.7 million shares shorted or 29% of all available shares. This is up from 6.3 million shares on November 15 and 17.8 million on November 29. It looks like a short squeeze could be reasonable for some of the recent increase.


Valuation is extremely stretched

This is a recording that has been played pretty much since the end of the first day of trading and when it was downgraded by two analysts on December 16 and another on Friday. With Twitter’s shares at $63.75 it has a market cap of almost $45 billion when all the vested stock options and RSUs are included (697.7 million by my calculation and will increase as more options and RSUs vest).  I have a Google Doc which calculates the number of potential shares available via this link.

This would place it in 16 th place on’s listing of tech companies by market cap above Yahoo! and below Texas Instruments. Texas Instrument’s 2012 revenue was $12.8 billion with net income of $1.8 billion, which compares to Twitter’s estimated 2014 revenue of $1.13 billion and a loss of under $100 million. Yes Twitter has much higher growth potential but it will need multiple years to reach any valuation metrics that support a $45 billion market cap.

When comparing Twitter to Facebook and LinkedIn Twitter has a 39x market cap to 2014 revenue and between 22x and 30x on 2015 revenue. Facebook and LinkedIn’s metrics are 13x and 11x on 2014 revenue, respectively, and 10x and 8x on 2015 revenue. And Facebook and LinkedIn are also solidly profitable.

Lock-ups come into play on February 15

From Twitter’s 424B4 filing (essentially the S-1 with final numbers from the offering) there are 474.7 million shares or 87% of its 544.7 million that are not available to be traded. The first tranche hits on February 15 with a large portion 181 days later or May 5, 2014.

The first earnings announcement will be critical

In reality every earnings announcement is critical but Twitter’s could be more so if the shares continue to trade at such high valuations. The shares could hold up if revenue comes in a good amount higher than the $216.9 million that sell-side analysts are expecting along with guidance for at least the March 2014 quarter which has revenue flat at $216.4 million.

Follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.

Source: Forbes

iPad Air Giveaway. Win a free iPad Air.

You Might Also Like


Shopping Deals


<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.




blog comments powered by Disqus

Latest stories

Iggy Azalea: Her Blunder from Down Under
Iggy Azalea: Poor Iggy falls off the Stage
The famed female rapper, Iggy Azalea committed a blunder recently. This Thunder from Down Under fell off the stage.
Martina Hingis makes a Comeback to the Game
Martina Hingis makes a Comeback to the Game
The tennis champ, Martina Hingis made a comeback to the game recently. She will play in the doubles match for the U.S. Open.
Ronda Rousey to fight Gina Carano; appears at The Expendables 3 Premiere
Ronda Rousey looks Sexy at The Expendables 3 Premiere
Ronda Rousey plans to fight Gina Carano in her next match in the ring. And Arnie and Sly ogled her at the moment when the premiere of The Expendables 3 was taking place.
Gaming Laptops: The Best &amp; The Rest
Gaming Laptops: The Best & The Rest
The long list of gaming laptops may include both the best and the rest. But ultimately it is your choice which one you want from many.

About the Geek Mind

The “geek mind” is concerned with more than just the latest iPhone rumors, or which company will win the gaming console wars. I4U is concerned with more than just the latest photo shoot or other celebrity gossip.

The “geek mind” is concerned with life, in all its different forms and facets. The geek mind wants to know about societal and financial issues, both abroad and at home. If a Fortune 500 decides to raise their minimum wage, or any high priority news, the geek mind wants to know. The geek mind wants to know the top teams in the National Football League, or who’s likely to win the NBA Finals this coming year. The geek mind wants to know who the hottest new models are, or whether the newest blockbuster movie is worth seeing. The geek mind wants to know. The geek mind wants—needs—knowledge.

Read more about The Geek Mind.