Twitter celebrated its six month anniversary of being on the New York Stock Exchange [NYSE] by watching its stocks plummet by as much as 18 per cent in one day.
USA Today reports that its share price dropped to $31.85 [£18.78] after the initial public offering’s sale lock-ups expiration left many insiders and employees free to sell shares in the social networking company.
Writer John Shinal stated that it was “telling” that Twitter and its lead investment bankers at Goldman Sachs haven’t pursued a secondary stock offering that would have followed the path trodden by reputable Internet firms including LinkedIn, Zynga, and Facebook.
The practice is one that allowed each of the firms to inject a few million more shares into public markets following IPOs in order to boost balance sheets and extract more fees for its bankers.
Twitter’s IPO shares were sold at $26 [£15.33] a piece back on 6 November and when the markets opened the following morning the shares were trading at $45.10 [£26.59] a share before accelerating to $70 [£41.27] a share by the end of 2013. It meant a valuation of some $60 billion [£35 billion] and since it has been far less rosey for the microblogging network, the current valuation sitting at a far more modest $18 billion [£10.6 billion].
The first sign that things were going wrong came back in February when it reported a net loss of $645 million [£380 million] for 2013 and even then the shares dropped by as much as 12 per cent in NYSE after hours trading on 5 February.
Twitter’s most recent results, which were released at the end of last month, beat revenue estimates with a figure of £250 million [£147 million] but the user base, which only grew by 5.8 per cent in Q1 2014, caused shares to plunge by over 11 per cent.
Over 255 million monthly active users log on to the service each month and it’s widely felt that a vast improvement in this category will instil renewed confidence in the company’s share price.