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    Twitter takes off on first day of trading

    This little birdie sure can fly.

    Twitter was launched as public company Thursday with a strong showing in its first hours of trading, undercutting the analysts and critics who had questioned whether the unprofitable social media outfit was an overvalued flash in the pan. Indeed, the lead-up to the IPO was a low-key affair, with many investors worried about a repeat of the Facebook debacle, in which another Internet star fizzed badly in its early days as a public company. Instead, Twitter dashed its doubters, at least on Thursday. After the IPO was set at $26 a share — itself a much higher price than Twitter sought earlier in the process — the stock’s first trades were above $45. At the end of its first day as a public company, Twitter carried a value of about $24 billion. The stock closed at $44.90, 73 percent above the IPO price.

    That successful debut is, so far, validation for a business that is built around the simple notion that people want to communicate online by sending out short messages constrained to 140 characters.


    “We always saw that Twitter was going to be an important company,” said Bijan Sabet, a general partner at the Boston venture capital firm Spark Capital, one of Twitter’s earliest backers. The firm now owns a 6 percent stake in the company that was valued at around $1.4 billion after Thursday’s close.

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    When Spark first funded Twitter in 2008, the company was valued at $80 million.

    “A lot of people thought we were crazy,” Sabet said. But, he added, “we saw firsthand the power of this product that could really democratize media and information.”

    Sabet and his partners at Spark aren’t the only locals who will reap the benefits of Twitter’s early success on Wall Street. Earlier this year, Twitter acquired two local start-ups, Crashlytics and Bluefin Labs, in largely stock transactions. Those deals formed the basis of Twitter’s East Coast headquarters in Cambridge.

    Boston also figured prominently in Twitter’s arrival on the New York Stock Exchange on Thursday morning.


    Boston Police Department spokeswoman Cheryl Fiandaca was one of three Twitter users invited to ring the opening bell. The company broke from the norm by having some of its more prolific users start the trading day. Fiandaca was joined by actor Patrick Stewart and 9-year-old Vivienne Harr, who has used Twitter to promote a campaign to end childhood slavery.

    Fiandaca said Twitter asked her to be part the opening ceremony because of how the Boston police had used its service, especially to communicate with the public after the Marathon bombings in April.

    “We’ve been going all over talking about how Twitter was used and how valuable it was,” Fiandaca said.

    And on Thursday she found herself on the balcony of the New York Stock Exchange as Twitter shares began to trade, a moment she described as unforgettable.

    “I haven’t even had a chance to tweet,” she said.


    The Boston Police Department’s embrace of Twitter illustrates just how much the social network has grown since it started off in San Francisco as a way for users to check in with friends. Today, the service is used by more than 200 million people worldwide and counts presidents, the pope, and Hollywood starts as users.

    That kind of notoriety helped Twitter on the stock market, despite its obvious business risks. In 2012, it lost $80 million, and it is on track to lose even more this year. During the lead-up to the IPO, some investors said they were still unclear about the company’s strategy to become profitable.

    But Twitter arrived on Wall Street at a time when the overall market for initial public stock offerings is robust and growing. So far this year, 201 companies have gone public, compared with 135 in all of 2012, according to Dealogic, a financial research firm.

    In the tech sector, most of the companies that have hit Wall Street recently are probably unknown to the general public because they serve the business market. Twitter is the most high-profile Web offering this year, and it’s the second-biggest Internet IPO ever, after Facebook.

    Despite the big first day outing for Twitter, some analysts remain skeptical about its long-term prospects and ability to convince investors it can make money and become a sustainable business.

    Lucas Jackson/Reuters
    Boston police spokeswoman Cheryl Fiandaca joined 9-year-old antislavery activist Vivenne Harr, Twitter cofounder Evan Williams, and actor Patrick Stewart on Wall Street.

    “Twitter may do well initially,” said Brian Hamilton, chairman of Sageworks, a financial research firm. “However, this performance and its overall valuation would be divorced from the financial performance of the company. This makes the company a dangerous long- term investment.”

    Indeed, the technology giants Google Inc., Apple Inc., Microsoft Corp., and even Facebook were all profitable when they went public.

    But Sabet, from Spark Capital, said Twitter has always been a company that takes the long-term view about how it will make money.

    “As more and more people use smartphones globally, we think there’s more opportunity for people to sign up,” he said.

    “There’s tremendous opportunity for growth.”

    Michael B. Farrell
    can be reached at