(AP Photo/Richard Drew)
Twitter shares opened at $45.10 Thursday morning, marking a 73% pop from its initial public offering price, before quickly climbing above the $46 level.
In short order the stock rose to its intraday high of $55.09 before settling into a range modestly above the opening price. By the closing bell shares had given up some ground amid broader market weakness and Twitter finished its first day at $44.90, up 72.7% on the session.
For the average buyer though - and there were plenty judging by data from TD Ameritrade that shows Twitter trades accounted for 5% of its client trades through the mid-afternoon - Twitter shares declined by 20 cents Thursday, slipping 9% from open to close.
The company sold 70 million shares for $26 apiece Wednesday, raising $1.8 billion. No insiders or existing shareholders sold in the offering, which was led by underwriters Goldman Sachs Group , Morgan Stanley and JPMorgan Chase , who have the option to purchase an additional 10.5 million shares.
Listing under the symbol TWTR, the IPO price gave the company a market capitalization of just over $14 billion, which quickly rose to more than $25 billion along with the surging stock. Also worth noting: the shares being sold Thursday were not sold by Twitter, but rather being sold by the buyers who purchased the stock from Twitter's underwriters in the IPO (and subsequently whoever bought shares from them).
Initial indications Thursday morning were for an open around $35, but that figure quickly raced past the $40 mark before the $45.10 open at about 10:50 a.m. in New York. Shortly before noon volume reached the entire 70 million shares sold in the offering and by the closing bell more than 117 million shares had changed hands.
At $25 billion, Twitter has a larger market value than S&P 500 components like Kellogg, T. Rowe Price and Netflix.
Twitter co-founder Evan Williams owns 10.4% of the company, Executive Chairman Jack Dorsey owns 4.3% and Chief Executive Dick Costolo owns a 1.4% stake. Rizvi Traverse controls 15.6% of the stock, while entities associated with JPMorgan own 9%.
Leading into the offering some concerns were raised that Twitter could mirror Facebook , but there were crucial differences. Chiefly, Twitter did not significantly increase the size of its offering in the day's prior to the deal like Facebook did, keeping supply stable even as demand pulled the per-share price higher.
RBC Capital Markets analyst Mark Mahaney, who launched coverage of Twitter Wednesday with a $33 price target, said the upside for the stock is built around the company's potential to join the ranks of Google , Amazon.com and Facebook as "Internet Utilities."
In some ways, Mahaney writes, Twitter will benefit from following Facebook into the public market. The latter has already proven the possibility of social network monetization and one of its biggest headwinds is a strength for Twitter, which already draws over 70% of its ad revenue from mobile usage
The biggest risks Mahaney sees are the lack of stickiness for social networks - there is almost no cost to switching from Twitter to Facebook, Instagram, Pinterest or any future entity - and potential scale and execution challenges with respect to monetization.
SunTrust Robinson Humphrey analyst Bob Peck, who initiated Twitter shares with a $50 target on Oct. 7, argues that Twitter has "crossed the chasm" with more than 215 million unique visitors every month and can offer advertisers real-time, regionally-focused opportunities that rivals can't match.
Evercore analyst Ken Sena calls Twitter "the ultimate social climber," in his initiation of coverage Thursday, slapping a $43 price target on the stock and arguing that its branded advertising potential exceeds that of Facebook, Google and LinkedIn .
Despite the bullish frenzy around Twitter shares, debut day also brought a downgrade of the stock. Pivotal Research Group's Brian Wieser, who recommended the shares at the IPO price, wrote that at Thursday's lofty levels "Twitter is simply too expensive" and drawing nearly the same valuation as companies like CBS and Yahoo.
Twitter's IPO comes in what has been something of a banner year for new offerings. Through Wednesday research firm Renaissance Capital tallied 188 U.S. IPOs this year, up 55.4% from 2012, and $44.4 billion in proceeds, up 8.8% (due largely to the lack of a mega-deal akin to Facebook's $16 billion offering in 2012).
The full underwriter option would put Twitter's IPO at $2.1 billion, the second-largest tech IPO on record - behind Facebook and ahead of Google - and third largest deal of 2013 behind Plains GP Holdings and Pfizer spinout Zoetis.
Most importantly, the average IPO has returned almost 31%, a key factor in perpetuating the upward trend in new offerings and overcoming any headwinds from exogenous factors. Those types of factors, like the government shutdown and debt ceiling debate, can have a freezing effect during more turbulent times, but with the broader market chasing fresh highs the IPO window is wide open.
On Wednesday alone, a day before Twitter's IPO, six deals of more than $50 million began trading, with security and storage firm Barracuda Networks posting the best first-day gain with a 20% rally.
At its current pace, the U.S. IPO market is poised to have its best year since 2007, before the financial crisis put major roadblocks in the way of companies trying to go public.
While the newly-public Twitter saw its stock shoot higher, fellow tech companies were in the red with Facebook off 3%, LinkedIn down 4%, Google 1.5% lower and the Nasdaq falling almost 2%. Follow @SchaeferStreetImages From Twitter's IPO
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