Twitter has decided to be the second big social network to jump onto the initial public offering bandwagon, setting a price of $24/26 a share for their company, valued at around $14 billion.
Unlike Facebook, Twitter has managed the first day without any problems, despite having a lacklustre revenue stream and no clear motives on how to make profit in the coming years, although the CEO and co-founders have said they have plans for advertisement.
The stock price has went up 73% since the start and now is flying high at $44.90, just $3 under the Facebook stock price. This gives Twitter a $30 billion valuation, pretty impressive for a company that only made $420 million in revenue with no profits in 2013.
The Twitter team managed the IPO better than Facebook did, where Facebook valued themselves too high and made investors nervous about their true value, Twitter laid it almost all out in the plain view and made it as though it was a normal investment.
Now comes the hard part, managing to deliver on the promises set for 2014. Twitter has said they should get around $1 billion in revenue next year and we are not sure how much of that is profit, but if they fail to double their revenue, they may be in serious waters.
Investors are not known for their tolerance with most companies, but are partial to winners like Amazon and Google, who spend billions in R&D and new projects making little profit in one quarter, but still manage to keep investors happy.
We are not sure Twitter is at that stage yet, but right now they are on a winning streak with their current valuation.