It seems like only yesterday (and it pretty much was) that Twitter (TWTR) took to Wall Street and became the second major social media stock (after Facebook of course) to issue an initial public offering (or IPO) of shares. I actually snapped the photo above in the evening after the stock traded on the New York Stock Exchange (NYSE) for the first time. I didn't buy shares of TWTR on the first day of trading, but I eventually did and the performance has been less than stellar for me.
While not my proudest moment in making a decision to dive into shares of TWTR, I am still holding onto the stock because I have strong a conviction for tech stocks and social media stocks for the future. Since TWTR has recently completely 2 full years of trading on the NYSE, I thought it would be a good idea to talk about the woes of many IPOs in their early trading years.
I should be noted that most IPOs tend to have performance charts very similar to the one below for the initial years of trading: a sharp pop up at the beginning but then strange fluctuations down. Granted, the market has gone through several major pullbacks on a global basis in 2014, but I would argue that TWTR has actually managed to hang on for the time being.
TWTR has lacked stability with its management team over the last year, and as I'm sure I've mentioned before: management competence is the most important quality of a company. It doesn't matter how great the product is: if the CEO is an idiot, the company is doomed from the get-go. Therefore, the fluxes in TWTR over the last year make a lot of sense given the headlines about shifts in power.
Relatively speaking, I think the stock still has a good story and when the chart does not reflect the story then it is certainly worth a second look. Do I advise that you buy shares of TWTR now? Not necessarily. The point is really that if you plan to play the IPO game with companies that you know very well, make sure that you plan to hold onto them for a LONG time. If you think that you will get rich on the first day of trading and in the next few years, you are sadly mistaken.
Read. Do your homework. The pieces will all come into place in time
Greetings, GradMoney Readers!
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