With shares shooting up 73% on its first day of trading as a public company, Twitter has a market capitalization making it more valuable than media and tech companies including Sony, Discovery Communications, Dish Network and Netflix.
Twitter shares closed Thursday at $44.90, with 117.7 million shares changing hands on the New York Stock Exchange by the end of the day. That gives the social company — which remains unprofitable — a market value of $31.6 billion on a diluted basis factoring in options, warrants and restricted stock.
That said, after the frothy IPO, Twitter’s stock could retreat in the days or weeks ahead as investors reassess their positions.
Twitter priced the IPO at $26 per share, and the stock opened at $45.10. It climbed as high as $50.09 per share shortly after trading commenced at 10:50 a.m. Eastern before settling back to the mid-$40s. Twitter’s IPO soared as the broader market declined, with the Dow Jones Industrial Average closing down 0.97% and Nasdaq falling 1.9%.
Facebook, which has more than four times as many users as Twitter, has a market cap of $115 billion.
At least one Wall Street analyst believes Twitter is overvalued at the current share price. Pivotal Research Group analyst Brian Wieser downgraded the stock to “sell” rating after shares opened Thursday at $45.10, given his previous price target of $30.
“(W)ith a price that pushes into the high 30s and beyond, Twitter is simply too expensive,” Wieser wrote. A $45 per share price assumes Twitter could generate more than $6 billion in annual revenue by 2018, which is “overly optimistic to us given our best assessment of the industry and the business at this point in time.”
Twitter reported $168.6 million in revenue for the third quarter of 2013, more than double the year-earlier period, but also disclosed its biggest net loss to date, of $64.6 million.
Twitter raised $1.8 billion through the IPO, which is the biggest in the tech sector since Facebook’s 18 months ago.