Social Media

Twitter Stock May Not Fly so High for Long

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Shares of Twitter have rocketed from their November 2013 IPO and enjoyed a breathless run for months. Shares of the online service for small messages were initially sold to investors at $26 a share on Nov. 6, 2013. Shares then rallied 145% in 2013, turning them into a stellar standout during what was already a spectacular year for stocks.

Lately, though, the stock is running into trouble (it closed at $57.91 Monday, down $3.83). Shares of Twitter are down 9% this year as the broad stock market continues to sink. Big gains in Twitter going into the year were powered by high hopes the company will be able to turn its massive user base into dollars.

Also, due to the way the service is structured, it’s practically custom-built for younger users who often turn to Twitter as their first go-to online service.

But the company is going to have to start delivering to justify its stock price, a realization investors seem to be reaching. The company is trading for 56 times tangible book value. That means Twitter is 367% more expensive than Facebook.

Investors are going to need to see the company moving to a profit.

USA TODAY

 

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