Twitter opens at $45.10, but investors still question its profitability
Twitter opened the New York Stock Exchange Thursday morning at $45.10, a 73 percent increase from its initial public offering of $26 Wednesday.
— NYSE Euronext (@NYSE) November 7, 2013
— Twitter (@twitter) November 7, 2013
The tech company racked up $300 million in losses in the last three years and may not show a profit until 2015, analysts predict. But Investors are betting Twitter will become profitable as advertisers shell out big bucks to reach consumers
“That’s always the peril of high-growth stocks,” Lawrence Levine, a partner and a specialist in financial valuation at the accounting firm McGladrey, told the New York Times. “So much of the valuation is embedded in the expected growth rate.”
Anup Srivastava, an assistant professor at Northwestern University’s Kellogg School of Management, told the New York Times that Twitter will make money one day, but “it’s not clear why anyone should pay this much for it today.”
Mark Newton, chief technical analyst at Greywolf Execution Partners Inc, explains the higher than expected price to MarketWatch: “There are a lot of people that missed Facebook that are saying they don’t want to miss this, so that is driving a lot of the price.”