Twitter’s offering price was $26 but by the end of the day the stock had risen dramatically and closed at $44.90. Earlier in the day financial analysts were arguing that the company had under-priced its IPO and “left a billion dollars on the table.”
Nonetheless the execution of the IPO was deemed “flawless” by many, especially in comparison to Facebook’s badly managed IPO. Twitter’s market cap is now $24.4 billion (up from $18 billion this morning). That’s only $10 billion less than Yahoo but quite a bit less than Facebook’s $115.8 billion.
Still some financial analysts believe Twitter is overvalued and must justify its market cap. One analyst put Twitter’s price target at $30 per share. We’ll see how the market reacts tomorrow and whether there’s some very short term profit taking.
Twitter will be trying to grow revenues by appealing to traditional TV-brand advertisers as well as going after small businesses at the bottom of the advertising food chain.
According to two recent surveys Twitter has roughly 16 percent (Pew) to 20 percent (AP) penetration among US adults, which means there’s lots of room for growth. That’s the “half full” interpretation. Beyond this, very few of its ads are shown outside North America, which also represents a growth opportunity.
But how will Twitter grow “mainstream” usage and generate more frequent engagement? What new ad products or capabilities will it need to develop to satisfy relentless investor demands for quarterly revenue growth?
Stay tuned for more exciting adventures.