Twitter shares open 73% higher on NYSE

Twitter IPOTwitter has just now gone public and it has done it in a big way. Valued at $18 Billion for a price of $26 per share (total offering of 70 million shares), twitter opened at NYSE with huge gains for investors. Opened at $45.1, volume surged to 13 million in very first minute of trade and share price reached as much as $50 in just few minutes before some profit booking kicked in.

In the process, twitter took over Facebook in share price.

All the craze around twitter seems little unrealistic given the fact the company is yet to make profit, also it posted larger losses last quarter. But, nonetheless, investors can probably see the earnings growing from Promoted Tweets and Promoted Trends. Here is how Jordan Weissman of theatlantic.com explains how twitter exactly makes money :

Twitter likes to measure its advertising revenue for every 1,000 timeline views, (for some reason, they call it “advertising revenue per timeline view,” as if they’re counting one at a time, but ignore that for now because it’s confusing). What counts as a view? It’s every timeline “requested when registered users visit Twitter, refresh a timeline or view search results while logged in,” either from your desktop or mobile device. Across the entire world, the company makes $0.80 per thousand views, or $0.0008 each time you look at your feed.

But all views are not worth the same. In the United States, the value is $2.17 per thousand views, or $0.00217 per time you refresh. Elsewhere, it’s $0.30 per thousand, or $0.00030 per refresh. That’s why even though 77 percent of Twitters 215 million monthly users come from outside the U.S., only 25 percent of its revenue comes from advertising to them.

Twitter’s building staff opened its offices in San Francisco extra early, at 5:30 a.m. on Thursday. By 7:30 a.m., hundreds of employees had flocked to their 9th floor cafeteria to watch Stewart ring the opening bell on TV.

If the full overallotment is exercised, as expected, Twitter could raise more than $2.1 billion, making it the second largest Internet offering in the United States behind Facebook Inc’s $16 billion IPO last year and ahead of Google Inc’s 2004 IPO, according to Thomson Reuters data.

Twitter boasts 230 million global users, including heads of state and celebrities, but it lost $65 million in its most recent quarter and questions remained about long-term prospects.

Hitesh Anand

I am a post graduate from Newcastle University, UK. I like studying and analyzing economic data and financial health of world.

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