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Last updated: November 7, 2013 9:18 pm
Shares in Twitter opened at $45.10 on volume of 11m as trading in the social media company began on the New York Stock Exchange, quickly rising to a peak of $50.09, giving it a market capitalisation of $34.7bn.
“It’s incredible and a surprise to me to see a company worth more than other well-established companies,” said Jack Ablin, chief investment officer at Harris Private Bank. “It’s hard to know how the stock will fare over time, but it’s a must-have name for social media investors, and that’s creating a feeding frenzy for it at the moment.”
Shares in Twitter closed at $44.90, some 73 per cent above its listing price of $26.
Among this year’s initial public offerings from US technology companies, Twitter’s debut ranked as the fifth best, according to S&P Capital IQ.
“It’s unbelievable how much demand this company is getting, but obviously one hour of trading is not a great indication of future activity,” said JJ Kinahan, chief strategist at TD Ameritrade.
While people don’t understand exactly how Twitter is going to make money, they understand the product. They use it all the time and it is exciting. They want to participate in this story
- JJ Kinahan, TD Ameritrade
Given that this is a company that has yet to generate a profit, buying shares in Twitter represents a bet on its growth prospects.
“While people don’t understand exactly how Twitter is going to make money, they understand the product. They use it all the time and it is exciting. They want to participate in this story,” Mr Kinahan added.
In recent months, the S&P has set record peaks for a gain of 24 per cent this year, but the overall technology sector has only risen 17.8 per cent since January.
However, Facebook, the social media network, has risen 80 per cent in 2013, after a rocky start as a public company last year. Its performance is seen as providing a hint of what Twitter may achieve in the coming year.
“I wouldn’t say the entire make-up of the US stock market is changing because of companies like Twitter or Facebook,” said Mr Kinahan. “The stock markets goes through phases. We had the Yahoo and Amazon period, when no one knew exactly how they were going to make money, and look where they are now.”
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