Twitter sinks to new low as 'lockup' expires

May 6, 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: Twitter founders, CEO to keep shares after 'lockup'

Related Stories

Twitter founders, CEO to keep shares after 'lockup'

April 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

January 8, 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

November 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

'Droneboarding' takes off in Latvia

January 22, 2017

Skirted on all sides by snow-clad pine forests, Latvia's remote Lake Ninieris would be the perfect picture of winter tranquility—were it not for the huge drone buzzing like a swarm of angry bees as it zooms above the solid ...

Singapore 2G switchoff highlights digital divide

January 22, 2017

When Singapore pulls the plug on its 2G mobile phone network this year, thousands of people could be stuck without a signal—digital have-nots left behind by the relentless march of technology.

Making AI systems that see the world as humans do

January 19, 2017

A Northwestern University team developed a new computational model that performs at human levels on a standard intelligence test. This work is an important step toward making artificial intelligence systems that see and understand ...

Firms push hydrogen as top green energy source

January 18, 2017

Over a dozen leading European and Asian firms have teamed up to promote the use of hydrogen as a clean fuel and cut the production of harmful gasses that lead to global warming.

0 comments

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.