Twitter Stock Hits a Home Run on First Day of Trading USA Today
Twitter shares hit it out of the park in their first day of trading, with the price soaring as investors grabbed for a piece of what they hope will be the next monster social media stock.
USA Today reports that Twitter shares soared 73% by the close of the market.
"Twitter and its bankers, led by Goldman Sachs' Anthony Noto, priced its IPO at $26 a share late Wednesday. The offering raises more than $2 billion and valued the business at $18.34 billion," the report notes. "The shares opened at $45.10 on the New York Stock Exchange, under ticker TWTR. The stock climbed as high as $50.09 and closed at $44.90, up 73%. That values the company at more than $31 billion, which compares to Facebook's market capitalization of $120 billion and LinkedIn's $26 billion value."
The pricing illustrates that "euphoria is returning to the tech sector," the story reports, attributing the enthusiasm to "optimism about the potential for social media to grab a big share of the booming online advertising business."
Shares in Facebook and LinkedIn are also surging, the report notes, with both stocks "up at least 80% so far in 2013."
Said Morningstar equity analyst Rick Summer: "We're entering a pretty extended period of optimism. There is a lot of downside risk at these levels."
The report adds: "Summer has a $26 fair value for the micro-blogging service, which assumes the company can attract one billion users over the next ten years, up from about 230 million now, while improving its monetization of those users by 20% a year."
Says Summer: "Is it possible this won't materialize? Absolutely. Our downside fair value target is $15."