NEW YORK ? On the first day of its Initial Public Offering, shares of Twitter soared to close almost 73 percent above its offering price generating a market cap of about $25 billion ? for a company not yet profitable.
Twitter priced its initial public offering Wednesday night at $26 a share. The stock debuted on the New York Stock Exchange Thursday and a nanosecond later the first trade came in at $45.10 a share. Shares quickly jumped to a high of $50.09 before dropping back a bit to close at $44.90.
Twitter co-founder Evan Williams is the company’s largest individual shareholder with a 12 percent stake, is now worth $2.6 billion. Peter Fenton, a Twitter board director and an early investor in the company, owns a stake worth $1.4 billion.
Williams’ fellow co-founder, Jack Dorsey, holds shares worth nearly $1.1 billion, and company CEO Dick Costolo has a nearly $346 million stake. Williams and Dorsey’s third partner, Biz Stone, isn’t on the list of largest shareholders.
Six institutional investors own 5 percent or more of Twitter. The biggest winner is private equity firm Rizvi Traverse, which holds a nearly 18 percent stake that is now worth $3.8 billion.
It is the stuff of dreams.
Twitter raised about $1.8 billion through the sale of 70 million shares Wednesday evening at $26 a share. The offering’s underwriters also have the option to buy another 10.5 million shares from Twitter. But Twitter has yet to turn a profit. The company pulled in $317 million in sales in 2012, but ended up reporting a loss of $79.4 million. For the first nine months of 2013, Twitter’s revenue was $422 million. But losses also increased, to $134 million.
It?s like the 2000 tech bubble on Wall Street never happened. Investors are once again betting on the if-come on companies that don?t have sound business fundamentals ? starting with profits.
