The Big Buzz Over the Twitter IPO

Interestingly enough, institutional investors seem to be saying that the Twitter IPO will not be the debacle that the Facebook IPO was for early investors, and that in fact the stock might be undervalued and positioned as a legitimate buy. Personally, I don’t plan to buy it because I don’t know how they make (or plan to make) their money and because given the state of the economy I think it is particularly speculative to buy into a company that makes something that is so entirely non-essential to anybody.

Facebook stock traded at more than 70 times earnings at its IPO (which was considered high) but at least they were profitable at the time. Twitter is still in the red. There is a flurry of concern over this one stock on this one day. I think the IPO price will be driven up just because of the hype, and of course they will be happy to take your additional dollars per share. I think that if you are considering buying Twitter soon, you will have to ask yourself “Is this the best deal that I can possibly make today?”

Keep in mind that I am not a day trader or a financial adviser or anything like that. In fact, I don’t work in the area of finance at all. There may be opportunities to make quick cash here, but that usually requires a much larger investment than I would want to make, or preferred (or founder’s) shares in the private company, options trading, etc. Also keep in mind that just because you didn’t take advantage of an opportunity to buy a certain stock on a certain day, it doesn’t mean that there will not be another opportunity ahead. So, like Public Enemy, I say “Don’t believe the hype”.

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