Twitter’s initial public offering was met with intense enthusiasm Thursday as the microblogger made its debut on the NASDAQ Exchange, rising as much as 93% ($24.09 each) in early trading, before closing up 73% for the day.
Twitter priced its IPO on Wednesday night at $26 per share, valuing the social media juggernaut at about $14.4 billion. The stock, which was expected to attract a lot of attention as it made its debut Nov. 7 under the symbol “TWTR,” far exceeded those expectations, opening at $45.10 each and rising as high as $50.09 per share in early trading. The stock lost some of that steam in later trading, closing at $44.90 per share, up 73% ($18.90 each) on Nov. 7. The gains came amid a broader market decline -- the Dow Jones Industrial Average dipped 152 points (1%) on Thursday, while the S&P 500 fell 1.3% and the NASDAQ dropped 1.9%.
The stock’s performance forced Pivotal Research Group senior research analyst Brian Wieser to downgrade the stock from a “buy” to “sell” after it far exceeded his $30 per share 12-month price target.
In a note to clients, Wieser wrote that Twitter would be fairly valued in the $20 to $30 per share range, based on its growth potential.
“However, with a price that pushes into the high 30s and beyond, Twitter is simply too expensive,” he wrote, adding that at $45 per share, Twitter’s enterprise value is about $30 billion, almost the same level as Discovery Communications, CBS, Yahoo and the combined Publicis Omnicom Group.
The enthusiams died down a bit in its second day of trading -- Twitter closed at $41.65 on Nov. 8, down 7.2% ($3.25 each), but still well ahead of the $26 offering price.