Twitter may have soared on its market debut, but its lustre faded on its second day of trading, wiping $5.5bn off its value. Shares in the social network, which allows people to post messages of 140 characters at a time, opened at $45.93 and immediately jumped more than 4pc to $46.94. However, those gains were quickly eroded as Twitter’s share price fell sharply to as low as $40.685, before closing down 7.2pc at $41.65.
The sudden dip fuelled fears that Twitter could be caught up in a technology bubble, akin to the one which preceded the 1999 stock market crash.
Many analysts have expressed concern that Twitter does not make a profit, and that its business plan is still unclear. The company, which makes money from advertising, doubled revenues to $168.6m in the quarter to the end of September, helped by a surge in mobile usage. However, it saw losses widen year on year from $21.6m to $64.6m.
The business has not disclosed when it expects to move into the black but analysts estimate that it will not do so until at least 2015. However, these concerns did little to tarnish Twitter’s first day of trading on Thursday. Sceptics who thought the eight-year-old company’s debut would be a repeat of Facebook’s disastrous IPO were proved wrong, as the social network soared in value to $24.5bn.
Shares in Twitter opened at $45.10 on Thursday and jumped as high as $50.09, briefly pushing the company’s market capitalisation above the $27bn mark. It ended the day at $44.90 a share, handing the loss-making business a valuation higher than corporations such as BSkyB, Sainsbury’s and BAE Systems.
Crucially, that figure was also nearly 73pc higher than the $14.2bn price tag Twitter had given itself on Wednesday evening, when the business priced its initial public offering at $26 a share.
Source: The Telegraph
