Tuesday, November 12, 2013

Wealthy people just seem to get richer and richer everyday and the big shots at Twitter are no exception; in fact they are a classic example. On October 28th I wrote here about us all getting in on the opportunity to make some money on a good thing.  It became a trick for the common guy who waited to buy the stock the day it was offered to all of us and became a treat for the Twitter fat cat big shots of the company who became instant billionaire or millionaires wherever you were on the corporate food chain.  What is worse is that no one cares.  They just say so, learn your lesson and get yourself a fat cat big corporate food chain job too.  After all, America is the land of opportunity.

In one week Twitter Chairman Jack Dorsey just earned? No, got $1,2 Billion dollars, Co-Founder Evan Williams got $2.9 Billion dollars.  And CEO Dick Costolo got $384 Million dollars.  So, these guys can literally say, thanks a Billion,  So, here are your new crop of super wealthy insiders at Twitter.  The company’s IPO, Initial Public Offering takes two of the companies founders into billionaire territory and a wave of millionaires along for the ride.  Hey! We all like rides  why weren’t we invited too?

Twitter shares went public on the NYSE New York Stock Exchange as shares opened at $45.10 and quickly;y shot past $50 bucks.  So, you were lucky if you got some of that 5 buck wave.  Those guys are filthy rich because they had stock holdings before the initial offerings.  Now how does a price of $26 per share shoot up overnight to $46 a share that no one could buy when it was $26 bucks?  Just the big shots get to get double the money   for some blah blah Internet site?  Not a single thing was even manufactured.

 By the end of the opening day the stock soared to 73% per cent.  That values the company to over $31 billion dollars which compares with Facebook’s market capitalization of $120 million dollars and LinkedIn’s $26 billion dollars.  Is America’s most valuable thing blah blahing? The gains highlight how euphoria is returning to the tech market fueled by optimism about the potential for social media to grab a big share of the booming online advertising business.  Facebook and LinkedIn shares are up at least 80% so far in 2013.  Ok so eventually even the small shareholder will probably make some money too.

Twitter’s CEO Dick Costolo told CNBC that the company is focused on making the service easier to use. A successful  IPO is supposed to climb on its first day not open at double the expected price that only the insiders were able to profit from.  So far this year the average one day rise for United States listings of technology stocks or Internet IPO’s is 35% percent.  So, I guess this just might be the new normal for high profile Internet marvels.

There is speculation that in three months the IPO craze will cool off and maybe that would be a good time to dive into the Twitter stock pool of investors.  By then it wold be a good chance to swallow up some shares at a better price.  Facebook isn’t the only hot social-media tech name to do a face plant in the first three months of its trading life.   Shares of LinkedIn, the professional social-media site, which jumped 109% per cent on day one went down 16% per cent three months later after it’s IPO on May 19,2011.
Yelp, the restaurant search site was 38% per cent lower three months after its 63% per cent first day gain on March 2,2012.  Groupon, the daily deal site, saw its shares fall 31% per cent in the three months following its IPO on November 4, 2011 when it gained 30% per cent.  How silly of me to think Twitter wouldn’t just follow the nonsense all the other Internet giants did. 

Now all of the stocks except for Groupon are trading above their price three months after their IPO days.

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