After the turbulent IPO of rival social network Facebook, many investment experts anticipated a difficult initial public offering for Twitter. The company, which has yet to have a profitable quarter, has been both hyped and savaged by analysts and tech industry commentators.
However, Twitter’s IPO was a remarkable success for the company, with shares in the popular microblogging service almost doubling in value on the company’s first day of trading. Twitter shares opened at $26 each before closing at $44.90 as initial trading came to a close.
Over 13 million shares in the microblogging company were sold after the company listed on the New York Stock Exchange this week. The increase in share value puts the company’s total valuation at approximately $31 billion – a significant increase above the valuations hinted at by technology industry insiders.
Many analysts had expected Twitter to float on the Nasdaq exchange, which is home to several other top technology stocks. The company’s massive surge in value makes its IPO the biggest technology listing in the last two years, following Facebook’s IPO in 2012.
Despite the immense success of Twitter’s IPO, critics of the company remain fairly sceptical that it will be a profitable long-term investment. Twitter’s finances have been covered in great detail since its decision to go public, with analysts fretting about the company’s lack of substantial revenue and significant losses.
The company earned $254 million in revenue during the first six months of the year, but lost $69 million due to high operating costs. Mary Jo White, the head regulator of the United States Securities and Exchange Commission (SEC) claimed that investors should be cautious of the metrics used by technology companies, including Twitter.
She noted that the big numbers used by technology firms to describe their user base and growth do not “inevitably translate into big profits for the company.”
