What Will the Short and Long Term Outlook Be for Twitter Shares?


If you know anything at all about Twitter you’ll undoubtedly have heard about its forthcoming stock exchange debut. In fact if you read our blog post last week, concerning our thoughts of a cautionary tale in the making, you’ll already be up to speed. Its IPO is coming soon, although a firm date has yet to be formally announced. This coming weekend sees a dry run for the IPO, in the hopes that the problems Facebook suffered during its IPO can be averted in this case.

So the question this week is what is in store for Twitter – soon to be known as TWTR on the stock exchange – in the short and the long term? Will it follow the path of Facebook or is there more good news than bad to look forward to?

Short term thoughts

When Facebook went public its initial share price nosedived pretty quickly. It also suffered from technical mishaps (Nasdaq subsequently got a $10 million slap on the wrist for these).

The recently announced dry run should put paid to the latter happening for Twitter, but it remains to be seen how well (or not) the initial share price does when the initial public offering finally goes live. Facebook’s share price dropped like a stone until it bottomed out at $18 per share in August of the year it went live. Will the same happen to Twitter or will it do a lot better in those early days? We shall be watching to find out the answer.

Long term thoughts

Even though Facebook’s launch was little short of a disaster, there was a fairytale ending more than a year down the line. As things stand at the moment, the share price is much better at a little upwards of $55. Whatever Twitter’s IPO turns out to be, there is the potential for this to grow in the future just as Facebook has.

Of course the big question is really whether or not Twitter can grow in terms of profits. It has yet to monetize its site to see real profits emerge, but Facebook’s path to profit has been equally as murky. This aspect of the giants of social networking doesn’t seem as important as the outlook for the future. People are clearly thinking long term with regard to making a profit from these sites. Those who held onto the early Facebook shares will now be much better off, as the IPO launched at $38 per share.

All in all perhaps it comes down to who is brave enough to take a chance on Twitter. Learning from the mistakes of its predecessor will be important to be sure, but this is only half the story. Whether you will be investing in the social media giant or not, you will undoubtedly be watching to see how things progress when the IPO finally becomes reality. And judging by all the information coming through, this shouldn’t be too long at all.