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Twitter Inc (NYSE:TWTR): Trying Times

Boston, MA 05/06/2014 (wallstreetpr) – Even as the second and final lockup on insider-owned shares in Twitter Inc (NYSE:TWTR) expired last night, Twitter faces more than just the challenge of an additional 480 million shares suddenly flooding the market and dragging stock prices lower.

In early trading, Twitter stock did go down by more than 10% even though top management has already said that they will hold on to their shares. Neither of the co-founders Jack Dorsey and Evan Williams are selling their shares nor will CEO Dick Costolo. That should bring some stability to Twitter’s share price. This is more or less standard practice for any tech company founder and/or CEO. It’s only expected that Steve Jobs would hold on to his Apple Inc. (NASDAQ:AAPL) stock or Bill Gates would not sell his Microsoft Corporation (NASDAQ:MSFT) shares. For younger tech companies that went publicly just recently, Facebook Inc (NASDAQ:FB) is a case in point where its CEO and founder Mark Zuckerberg had declared months after the stock’s May 2012 IPO that he won’t be selling any Facebook stock.

Falling Tech Stocks

It’s noteworthy that Twitter Inc (NYSE:TWTR)’s share price has declined by 43.51% so far this year — although Twitter is still trading higher than its IPO price of $26. This could not have been caused simply by the expiry of the lockup.

Twitter’s falling stock prices can be seen in the light of disappointing results in the recently released 2Q2014 results. To be sure, Twitter’s numbers were not bad in themselves — it is just that they failed to meet the stratospheric expectations from the investors. Revenues doubled in 1Q2014 to reach $250 million compared to 1Q2013. Twitter of course still remains a loss-making company and reported a net loss amount of $132.4 million in the just-ended quarter as compared to a loss of $27 million in 1Q2013.

Twitter Inc (NYSE:TWTR)’s full year revenue expectations for FY2014 are between $1.2 billion to $1.25 billion.

Another darling of tech investors — LinkedIn Corp (NYSE:LNKD) — seems to be in the same boat as Twitter. Its stock price too has tumbled by more than 30% since the beginning of the year even though it is posting record profits and showing good growth.

Published by Ruchi Gupta

Swati Goyal has over 6 years of experience in financial research & analysis domain. She has built financial models varying from consumer goods to banks. She has her articles published in leading dailies of the nation

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