Twitter Tanks

twitter-logo-birdTwitter tanks… that should be the headlines of this morning’s financial newspapers. On Tuesday social media giant Twitter hit the skids giving up as much as 18% and closing down 11%. Tuesday marked the “unlock” date for insider shareholders. This is the date that these businesses and individual, most the original investors can sell their shares after the IPO. Although none have made any moves to sell these shares, it was enough to spook the markets on a quiet news day.  Many traders have been wondering how the “twitting” site can turn their huge membership into a profit center. Twitter had 4.5billion members at the time of the IPO and has added more to climb to 5 billion members, but have yet to be able to come up with a way to turn this into profits.


Not that long ago, Twitter was the sweetheart of both Silicon Valley and Wall Street. Now, investors are writing eulogies for the service and claiming that it will be crushed by its rival Facebook. Are these the same people that filed lawsuits against Facebook when its IPO launched?  Last week, shares in the real-time social media company closed at their lowest level since listing. They’re still above the IPO price of $26—which is the actual price the company sold its stock at to big institutional investors—but they’ve fallen nearly 50% from their peak in December and around 40% so far this year. How fast speculators turn their back on companies sometimes amazes one.

Twitter CEO Dick Costolo and co-founders Jack Dorsey and Ev Williams last month took the unusual step of saying they had no intention of selling any of their shares. Chris Sacca, an early Twitter investor, told Bloomberg that he also plans to hold onto the 15 percent of the company’s shares that he manages through various arrangements.

Elsewhere in the markets on Tuesday, it was a quiet day. Wall Street saw further downside over the course of the trading session. The weakness reflected lingering concerns in the Ukraine crisis following continued clashes between Ukrainian armed forces and pro-Russian militants. The US declined sharply on Tuesday, a day after the Dow and S&P 500 closed near record highs, as AIG reported a decline in profit and Twitter fell as insiders got their first opportunity to sell since the company’s initial public offering. Asian equities declined on Wednesday as trading volumes returned to normal with Japan and South Korea resuming trade following a long weekend. European markets ended the day lower taking cues from the US.

Dow May 7

Asian shares fell this morning as the heightened possibility of Ukraine slipping into civil war dampened risk sentiment. Key benchmark indices in Japan, Hong Kong, China, Singapore, South Korea and Taiwan were down 0.44% to 2.3%.

For the rest of the week, analysts say the biggest market moves will be testimony from Federal Reserve Chairman Janet Yellen today and tomorrow, a meeting of the European Central Bank on Thursday, and ongoing tensions in Ukraine. The ECB is currently undecided and no one is sure what to expect from Mr. Draghi as the euro continues to gather strength trading at 1.3927 against the weak US dollar this morning. 

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