Twitter sinks to new low as 'lockup' expires

May 06, 2014
Twitter shares tumbled to fresh lows on Tuesday, under pressure after the expiration of the so-called lockup period, which banned sales by company insiders after its public offering

Twitter shares plunged to new lows Tuesday, under pressure after the expiration of the so-called lockup period, which banned sales by company insiders after its public offering.

The stock sank 17.8 percent to close at $31.85, the lowest level since the Twitter initial public offering (IPO) last November.

Under US securities lockup rules, some insiders were barred from selling for a period of time after the social network's IPO.

The lockup expired on Tuesday, but Twitter co-founders Jack Dorsey and Evan Williams and chief executive Dick Costolo indicated they have no short-term plan to sell their shares.

Twitter made a spectacular Wall Street debut in November, rising from its $26 offering price to more than $70, but has been hurt by concerns about slowing growth and doubts on profitability.

Trip Chowdhry, analyst at Global Equities Research, said Twitter is under pressure on several fronts.

"Engagement on Twitter is falling," Chowdhry told AFP.

"And there seems to be a shift in the industry from public toward private communication. So more people are using WhatsApp, Facebook Messenger, Snapchat, WeChat and others. Twitter is not well-positioned for this change."

Jon Ogg at the specialized blog 24/7 Wall Street suggested the worst may not be over for Twitter, saying it still has a lofty market value.

"What stands out is that Twitter's market cap is still almost $20 billion, and that is after hitting a new low," he said.

"It is also still worth about 16 times expected 2014 sales and closer to 10 times 2015 sales. On expected earnings, Twitter trades at more than 1,000 times expected 2014 earnings and only 165 times expected 2015 earnings per share."

Twitter said in a regulatory filing in March that "the market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market, and the perception that these sales could occur may also depress the market price of our common stock."

Explore further: David Goldberg, tech exec married to 'Lean In' author, dies

Related Stories

Twitter founders, CEO to keep shares after 'lockup'

Apr 14, 2014

Twitter co-founders Jack Dorsey and Evan Williams and chief executive Dick Costolo have no short-term plans to sell their shares in the social network, according to documents released Monday.

Twitter stock continues to slide

Jan 08, 2014

Twitter's stock price continued a recent decline on Wednesday, closing down 3.5 percent after an analyst lowered the short messaging service's rating on concerns that its stock price is too high.

Facebook jumps on biggest lock-up expiration day

Nov 14, 2012

(AP)—Facebook's stock is up more than 7 percent despite expectations that it would fall because more than 850 million additional shares in the company are being freed up for sale.

Recommended for you

Comcast now has more Internet than cable customers

11 hours ago

Just before its $45 billion deal with Time Warner Cable collapsed over regulators' fears about a giant cable company's control over the Web, Comcast was racking up more Internet customers.

Google embeds engineers as professors

May 03, 2015

Howard University freshman Alanna Walton knew something was different about the professor teaching her introduction to computer science course.

Uber office raided in southern China: report

May 01, 2015

Taxi app Uber's office in the southern city of Guangzhou has been raided by authorities, a report said Friday, in an apparent crackdown on the Internet ride-sharing service.

Prime minister wants Japan to learn from Silicon Valley

May 01, 2015

Japan Prime Minister Shinzo Abe gave California's governor a hint of what it would be like inside a Japanese-made bullet train Thursday, displaying a train simulator for Gov. Jerry Brown during a meeting ...

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.