Twitter Caps Nine Years Of Largely Unfulfilled Promise On NYSE
While Twitter made a splash with its trading debut on the NYSE in November 2013, it has since failed to impress investors.
(Bloomberg) -- Elon Musk’s buyout marks the end of nine years of public trading in Twitter Inc., which debuted with a bang but failed to match the rocket ride achieved by some other tech heavyweights.
While the stock made a splash with its trading debut on the New York Stock Exchange in November 2013, surging 73% on its first day, the company has since failed to impress investors as it struggled to consistently grow its user base and ramp engagement.
Twitter’s shares doubled during its tenure as a listed company, equal to an 8.4% growth a year. That’s lower than the S&P 500 Index’s 11% annual return and Nasdaq 100 Index’s 15% climb.
“There’s no question it has never lived up to what investors had hoped for when it went public, when it was trading at about double where it was earlier this year,” said Alec Young, chief investment strategist at Mapsignals. “Most investors have been disappointed with the stock performance, the growth, the penetration -- it just seems like it never took off with users and got the kind of mass adoption other services got.”
Musk completed his $44 billion purchase of the social media company putting the world’s richest man in charge of the struggling social network after months of public and legal wrangling over the deal. The buyout would take Twitter private about a week before the “TWTR” stock ticker turns nine years old.
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Twitter’s underperformance relative to its social peers largely reflects how revenue growth at the micro-blogging platform has consistently been slower, with others better able to monetize their user bases. Over the past five years, Twitter has averaged quarterly revenue growth of 19%, compared with 29% at Meta Platforms Inc., 50% for Snap Inc., and 51% for Pinterest Inc.
Musk’s interest, however, has the company ending its run as a public stock on a positive note. It gained 24% this year, making it the top performer among components of S&P 500 communication services companies. Its stock performance has massively outdone its peers in a year marred by plunging growth stocks thanks to supersized interest-rate hikes from the Federal Reserve, surging inflation and the possibility of a looming recession.
“It was a great exit... because there is no way the company would be worth $40 billion in the current environment,” said Neil Campling, an analyst at Mirabaud Securities. “Companies such as Pinterest and Snap trade on significantly lower valuations. If Twitter was trading still today independently I think it would be at $25/share (tops) by the end of the year.”
For Twitter’s stock investors, it’s been a wild ride with Musk in the driver’s seat.
“The rollercoaster track he’s taken Twitter shareholders on has ended in a last scream of exhilaration for those who clung on for the ride, said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown. “While the price of $54.20 a share is still below the heady heights of above $77 reached in the pandemic rush for tech in March 2021, it’s well above the $32 the company was being traded at a year later, just weeks before Musk slapped his generous offer on the table.”
--With assistance from .
(Updates with analyst comments.)
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